Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — SCOTLAND

Scottish Trades Union Congress

Mr. Ron Brown asked: the Secretary of State for Scotland when he intends to meet the leaders of the Scottish Trades Union Congress.

Mr. Norman Hogg asked: the Secretary of State for Scotland when he expects to meet the General Council of the Scottish Trades Union Congress.

The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): My right hon. Friend and I have met representatives of the STUC several times since taking office and have made it clear that we are prepared to meet them at any time they wish.

Mr. Brown: Is the Minister aware that the Government's policies are creating havoc in Scotland, hitting jobs and living standards in particular? Does not he appreciate that the STUC has no alternative but to step up the fight against him in order to defend standards in Scotland?

Mr. Fletcher: I refute entirely the accusation of havoc in Scotland. The Scottish people, like those in the rest of the United Kingdom, are determined to support the Government in seeing their policies through. It would be helpful to employment and economic prospects in Scotland generally if the hon. Gentleman and his colleagues, and STUC leaders in Scotland, would urge Scottish workers not to take part in the so-called day of action next week. That must be exceedingly damaging to the Scottish economy.

Mr. Hogg: When will the Minister accept that the Government's policies in Scotland have failed and that they do not command the respect or support of the Scottish electorate, as was proved last Thursday? When will he stand up and fight against monetarism that is doing so much damage to Scotland?

Mr. Fletcher: It is a great pity that the hon. Gentleman is so impatient. The Government's policies will work through in Scotland as in the rest of the United Kingdom. It will take until some time next year before the benefits of these policies can be seen.

Mr. Sproat: Will my hon. Friend point out to the STUC and to opposition Members who have asked questions the vast and damaging discrepancy between their claims, on the one hand, that they want a sound and prosperous economy, and their advocacy, or the other, of a day of inaction that can only lead to loss of production, loss of wages and massive inconvenience to the public?

Mr. Fletcher: My hon. Friend is right. It is a pity that the STUC will not listen to its own members in Scotland, most of whom have no desire to take part in this day of action.

Mr. Buchan: Is not the hon. Gentleman aware that the Government's policy is, unfortunately, working through in Scotland, to the tune of 200,000 unemployed? Is not any small amount of production lost on the day of action a fleabite compared with the enormous loss of production caused by that number of unemployed?

Mr. Fletcher: The hon. Gentleman knows that the previous Labour Government doubled unemployment in Scotland during their term of office. He will also know—I am thinking of incidents reported in the press concerning his constituency—that further damage may be inflicted on the car factory at Linwood if, because of a dispute over manning involving four men, there is a closure. I hope that the hon. Gentleman will help the responsible people to make sure that a closure is averted.

Mr. John MacKay: In addition to the problem at Linwood, which is most unfortunate given the progress that the


factory has made, is it not sad to reflect that the STUC did so little about the Hunterston dispute that closed that deep-water steel port for months?

Mr. Fletcher: My hon. Friend is right. There is a great deal that the STUC can do to promote jobs in Scotland and help the Scottish economy. I hope that it will do so.

Mr. Harry Ewing: Why does the Minister show such abysmal ignorance about what happened at Hunterston? Why does he not tell his hon. Friends that it was the good offices of the STUC and not the Minister's stupid interventions that brought a solution to the Hunterston problem? Would the hon. Gentleman care to tell the House of the damage he has done to the Scottish economy by his wanton attack on Scottish workers before his visit to America? Is he aware that evidence is now becoming available showing that inward investment from America has been damaged by that attack?

Mr. Fletcher: The Hunterston dispute continued for six months and inflicted great damage on the Scottish economy. The hon. Gentleman's other remarks about inward investment from America are so unsubstantiated that they do not merit further comment.

Unemployment

Mr. Harry Ewing: asked the Secretary of State for Scotland what increase there has been in unemployment in Scotland since 3 May 1979.

Mr. John Home Robertson: asked the Secretary of State for Scotland how many people were unemployed in Scotland in May 1979; and how many are unemployed at the latest available date.

The Secretary of State for Scotland (Mr. George Younger): Seasonally adjusted unemployment in Scotland—the best guide to trend—increased by 24,800 between May 1979 and April 1980. On 10 May, 1979, the date of the monthly count, the total number of people registered as unemployed in Scotland was 165,441 and on 10 April 1980 the figure was 201,067.

Mr. Ewing: Does the Secretary of State accept that he has used the figures

which exclude the school leavers because they are convenient for him? Does he remember that when he last left office he left 300,000 people in Scotland on a three-day week? Is it really his intention to leave those 300,000 people totally unemployed, with the abject poverty that that brings to families in Scotland?

Mr. Younger: As usual the hon. Gentleman spoils a good point by extraordinary exaggeration. He might recall that, when I left the Scottish Office, unemployment was 88,400 and by the time that he left office in May last year it was no less than 181,000. [Interruption.] I do not know whether the hon. Gentleman's running commentary is intended to help the House, but he might remember that in the first year of the Labour Government the increase in unemployment was 25,000—rather more than the figure that I have just announced.

Mr. Home Robertson: Is not the Secretary of State thoroughly ashamed of that abysmal record after one year in office? I wonder how serious unemployment will be after a further year. Will the Secretary of State comment on reports in today's issue of The Scotsman to the effect that the Government are considering the closure of Scottish Development Agency offices abroad? Does he accept that that will make it even more difficult to attract the vital foreign investment required to create the jobs that we so desperately need?

Mr. Younger: I suppose that I should be flattered that the hon. Gentleman expects me to put right in one year what his hon. Friends put wrong in five years, no decision of the type mentioned in The Scotsman report has been made. The Scottish Office and the Select Committee are looking into the matter and naturally we shall want to know what they have to say before making a decision.

Mr. Henderson: Does my right hon. Friend agree that the best way to improve employment in Scotland is by investment and that that is being damaged by an unfortunate poor industrial relations image abroad? Does he agree that that image might not be justified entirely but that it is given further credence by the proposed inactivity on the day of action and the type of behavour that we saw at Hunterston?

Mr. Younger: I agree that that reputation is certainly not justified. I am sorry to say that it is greatly assisted by the fact that Opposition Members failed to make a proper condemnation of the strike record in the last year which, in many cases, was stimulated by them and their friends.

Mr. Russell Kerr: We applaud it.

Mr. Russell Johnston: Has the Secretary of State made any estimate of the extent to which unemployment will be increased if the pulp mill at Fort William is closed? What action is his Department taking? Do the Government believe that the newsprint option is still a runner?

Mr. Younger: I share the hon. Gentleman's concern about the situation at Fort William. We are sad that the proposal which we tried to get going has so far not come to fruition. As I said in my statement, we are still looking for other ways of getting the project going. I shall be glad to do everything possible in the coming months to try to achieve something in that area.

Mr. Gordon Wilson: Will the Secretary of State come clean on the question of inward investment and the role of the Scottish Development Agency overseas? Has he not admitted that he is under pressure from other Government Departments, including the Foreign Office and the Department of Industry? Does he agree that the SDA will be hamstrung if the pressures are successful? Will he defend the SDA in its work of trying to improve employment in Scotland?

Mr. Younger: I have defended the SDA on many occasions. I am under pressure to improve the inward investment performance of Scotland generally. We are considering how best that can be done. We must take account of what the Select Committee has to say. I should have thought that that was the way that everybody wants to approach the problem.

Mr. Allan Stewart: Does my right hon. Friend agree that employment prospects in Scotland must depend heavily on the expansion of small firms? Does he further agree that the real extent and importance of the changes announced by the Chancellor of the Exchequer in

capital taxation for small firms are being appreciated increasingly?

Mr. Younger: I am grateful to my hon. Friend. I am glad to see that since the Chancellor's announcement a number of people involved in small firms' organisations have made it clear that what he says is so. This is one way in which we can recover some of the jobs that we have lost in the last five years under the previous Administration.

Mr. Dewar: A few minutes ago the Under-Secretary of State said that Government policies would work through in Scotland in the coming year. What is meant by that? Are we to understand that in the coming year there will be a genuine fall in the seasonally adjusted unemployment rate?

Mr. Younger: My hon. Friend was trying to make it clear that it is unreasonable to expect new economic measures to take effect in a year or less. All the Government's policies are directed to strengthening the economy and enabling the recovery which eluded the last Government in their five disastrous years.

Convention of Scottish Local Authorities

Mr. O'Neill: asked the Secretary of State for Scotland when next he intends to meet the Convention of Scottish Local Authorities.

Mr. George Robertson: asked the Secretary of State for Scotland when next he expects to meet the Convention of Scottish Local Authorities.

The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): My right hon. Friend will meet the convention on 20 June.

Mr. O'Neill: Before the Secretary of State meets the convention will he reflect on the results of last week's elections and the Labour victories which were achieved on the basis of a programme of opposition to cuts in Government expenditure and the tenants' rights legislation? Will he reconsider the provisions in the Tenants' Rights, Etc. (Scotland) Bill which will compel local authorities to sell houses? Will he withdraw those provisions and allow local authorities to determine their own housing policies?

Mr. Rifkind: The hon. Gentleman would be advised to consult the detailed analysis of the Scottish local elections in The Times of yesterday. The analysis concludes that the Conservative and Labour share of the vote remains the same as at the general election. The Government take great satisfaction in that. The hon. Gentleman must appreciate that the vast majority of council tenants in Scotland are anxious that they should be allowed to purchase their own homes. The Government have not the slightest intention of making any alterations in that proposal.

Mr. Robertson: Since the Government's cash limit and their allowance for inflation in relation to Scottish local authorities in the coming year is, according to the convention's estimate, almost £100 million short of that needed to cover inflation, may I ask what he will say to Mr. William Fitzgerald, the Tory president of the convention, when he next meets him? Is the Minister aware of the statement made by that gentleman a fortnight ago—
 I think most authorities would regard further drastic cuts as being physically impossible "?

Mr. Rifkind: The first thing that I shall say to Mr. Fitzgerald is that the cash limit provided by the Government compares very favourably with the cash limit of the previous Administration which presumed pay increases of 5 per cent.—woefully below the reality. The cash limits which the Government have provided for take wage increases into account. The figure is more realistic than that of the previous Administration; and that view is shared by the convention.

Mr. Lang: When my hon. Friend reflects with COSLA on the local government election results will he bear in mind that the SNP was thrashed in the local government elections and that the Labour Party did worse three years ago than the Conservative Party did this year? Will he remember that Labour councillors remain in the minority in Scotland? Will he therefore undertake to persevere with the Government's policies?

Mr. Rifkind: My hon. Friend is correct. Three years ago the Labour Party suffered a net loss of 177 councillors in

Scotland. Last Thursday the Conservative Party had a net loss of 43. It is an interesting comparison and my hon. Friend can take great satisfaction from it.

Mr. Foulkes: When the Minister meets the convention will he put right the misleading impression created by the Secretary of State at the recent annual general meeting of the Disablement Income Group? Is the Minister aware that the Secretary of State said, cruelly, that the disabled were not doing badly under a Tory Government when the reality is that major cuts have been made in the health and social work services, and that the Secretary of State for Social Services has said that the disabled must take their cuts along with everybody else? Will he put right that wrong impression?

Mr. Rifkind: The hon. Gentleman must check his facts before making accusations. If he checked his facts he would realise that the real level of spending on the Health Service in Scotland is increasing compared with previous years.

Mr. Bill Walker: When my hon. Friend next meets the president of COSLA, Mr. William Fitzgerald, will he ask him to draw to the attention of the other members of COSLA the action of Tayside region, which has shown how a thrifty region can cope within its budget? Will he also ask Mr. Fitzgerald to look at the proposals for a £76 million overspend and draw attention to the fact that this overspending creates no new money? Does he agree that the money has to come from rates and that will affect business prospects in Scotland?

Mr. Rifkind: My hon. Friend is absolutely correct. It is significant that the one Labour Party group in Scotland—in the Lothian region—which set out to defy the Government found itself totally rejected by the electorate of Edinburgh. It failed to win a single seat from the Conservative Party in that city.

Mr. Foulkes: The boundaries were changed.

Job Creation

Mr. James Hamilton: asked the Secretary of State for Scotland what are his plans for creating employment in Scotland.

Mr. Younger: Our policies are aimed at reducing inflation by economic and monetary measures and establishing a soundly based economy in which industry can expand and create secure jobs in Scotland, as elsewhere in the United Kingdom.

Mr. Hamilton: Is the Secretary of State aware that in the Strathclyde region we had 21,148 redundancies last year? It is now a fact that, so far this year, 80 per cent. of redundancies in Scotland are in the Strathclyde region. Will the Secretary of State further tell us—and I have now asked this question three times—about the ill-fated trip to America by his hon. Friend and say how many jobs have been brought to the Strathclyde region, or other regions, to mitigate the disastrous situation there?

Mr. Younger: As a Strathclyde Member of Parliament I share the hon. Gentleman's concern about the position throughout Strathclyde. The hon. Gentleman will be aware that we have recognised this fact in enlarging the SDA in West Central Scotland. We have left the region with the top level of grant and assistance of all kinds, and with a bigger differential over other areas. I am sure that the hon. Gentleman will welcome that fact as much as I do. As the hon. Gentleman knows, the visit of my hon. Friend to America was highly successful, though it is not possible to add up the number of jobs that might have been created in the short period since. The contacts made by my hon. Friend are still being followed up. It was certainly a worthwhile visit.

Mr. Pollock: Does my right hon. Friend agree, apart from the measures announced by the Chancellor in the Budget, that the employment measures will also be of great assistance to those in small businesses who are anxious to expand and thereby improve employment prospects in the rural areas of Scotland?

Mr. Younger: I agree with my hon. Friend. It was widely known everywhere—except in the Labour Party—that the employment legislation of the last Government resulted in many people losing their jobs because small businesses did not dare to take people on. We hope to put that right.

Mr. Robert Hughes: Since the right hon. Gentleman has admitted today that he is considering closing SDA offices abroad and since he has said that the Select Committee is looking at this matter and that no decision will be made until the Select Committee has reported, may I ask him whether he is aware that not a single line of evidence from his Department has even suggested that such a thing was in prospect? Will he now, therefore, submit a paper to the Select Committee summarising his thinking. Will he come to the Select Committee to explain what is happening? If the Select Committee is to do a decent job in relation to inward investment we cannot base our judgment on evidence produced by newspapers.

Mr. Younger: As I never made such an admission it is not surprising that none of the papers provided by my Department made any such admission either. I stated, quite clearly—I do it again to make sure that the hon. Gentleman has not got the wrong end of the stick—that we are looking at ways of improving the overseas promotion effort of Scotland. We are considering this ourselves. The Select Committee is also considering it and we look forward to hearing what the Committee says before taking any decision.

Mr. Myles: Is my right hon. Friend aware that if the agriculture industry were suitably encouraged there would be great employment potential in that industry?

Mr. Younger: I agree with my hon. Friend. As he knows we have, on three occasions during the past year, devalued the green pound to the assistance of the agriculture industry. We have also made the largest ever increase in the hill livestock compensatory amounts. That should help those who work on the hill farms.

Mr. Harry Ewing: Is the Secretary of State aware that the people of Scotland are rapidly becoming tired of his saying that he is worried and concerned about the situation but not doing anything about it? In view of his comments on the Scottish Development Agency will he give a guarantee to the House that the report in The Scotsman today is wrong and that there is no possibility of SDA offices abroad being closed?

Mr. Younger: I think that I have made this clear enough already. The report in The Scotsman was not correct today though the whole question, as a matter of course, is under consideration in order to try to improve the performance of Scotland. We look forward to hearing the views of the Select Committee before making any such decision. That is perfectly clear to me, though it may not be clear to the Opposition.

Highlands and Islands Development Board (Land Use)

Mr. Maclennan: asked the Secretary of State for Scotland if he will seek to increase the powers of the Highlands and Islands Development Board over the use of land.

Mr. Younger: No, Sir. The HIDB has similar powers to those of other public agencies and local authorities and I am not persuaded that there is need to extend them.

Mr. Maclennan: Does that mean that the Secretary of State rejects the legal advice given to the Scottish Office, which was accepted by his predecessor and referred to in paragraph 9 of the Highlands and Islands Development Board's case for increasing its powers under the 1965 legislation? Does the Secretary of State agree that it would be wholly unreasonable to ask the HIDB to put to use the powers that it has only to demonstrate their complexity? Does the Secretary of State accept or reject that legal advice or has he received fresh legal advice?

Mr. Younger: No, Sir. The legal advice is there and I have no reason to quarrel with it. The hon. Gentleman asks whether I wish to give new powers to the HIDB. I was making it clear that, if existing powers have not been used, I see no reason to give further powers to the board.

Mr. Donald Stewart: Is the right hon. Gentleman aware that his statement that he is satisfied with the situation is almost incredible? Does he realise that the latest action of the feudal reactionaries who own the land in the Highlands is to charge exorbitant prices for leases on schools whose 100-year leases are running out? Is it not time that the question

of land in the Highlands and Islands was tackled?

Mr. Younger: The Highlands and Islands Development Board has wide powers. If the board has not so far used those powers it would be strange if Parliament were asked to give it yet more powers without due cause shown.

Mr. John MacKay: In the hope that my right hon. Friend might get through to the Opposition at his third attempt, will he restate that he, and the HIDB, have powers to deal with those matters contained in the board's report? The board has never attempted to use those powers and until it does attempt to use them it should not seek additional powers.

Mr. Younger: I entirely agree with my hon. Friend and I am grateful to him for trying to get something into the minds of Opposition Members. I do not claim that I could do that in three shots. I would have to try for much longer than that.

Mr. Maclennan: On a point of order, Mr. Speaker. In view of the wholly unsatisfactory nature of the Secretary of State's reply, I give notice that I shall seek leave to raise the issue on the Adjournment.

Scottish Confederation of British Industry

Mr. Knox: asked the Secretary of State for Scotland when next he plans to meet representatives of the Scottish Confederation of British Industry.

Mr. Alexander Fletcher: My right hon. Friend and I have met representatives of the Scottish CBI several times since taking office and have made it clear that we are prepared to meet them at any time they wish.

Mr. Knox: When my hon. Friend next meets the members of the Scottish CBI will he discuss with them the effect that the current unrealistically high exchange rate is having on Scottish manufacturing industry? Does my hon. Friend agree that that makes it difficult to sell the exports of Scottish manufacturing industry abroad and that it is having a depressing effect on output in Scottish manufacturing industry?

Mr. Fletcher: The CBI has raised this matter—as have most people in industry


in Scotland—and is fully aware of the reasons why the exchange rate is high. It is known that the rate must reach its level on market conditions. Incidentally, the most recent report of the CBI showed that Scotland's export performance is still above average for the United Kingdom.

Mr. Canavan: What are the CBI, or the Government, going to do about the problems facing the foundry and paper industries bearing in mind that in the Denny and Dunipace area of my constituency about 500 redundancies have been announced over the past three months alone? Will the Government look sympathetically at the request by the Central Region council to upgrade that area to special development area status?

Mr. Fletcher: We are aware of the difficulties facing the industry mentioned by the hon. Gentleman. They are the result of commercial and trading considerations which the Government are unable to help. As to an approach from Central region about development area status, that is a matter for my right hon. Friend the Secretary of State for Industry.

Mr. Allan Stewart: Will my hon. Friend discuss with the CBI its recent representations about the burden of rates on industry and commerce in Scotland? Is it not a fact that in Socialist areas rate increases have been such as seriously to threaten very large numbers of jobs, especially in smaller firms?

Mr. Fletcher: My hon. Friend is absolutely right. The CBI has made representations about the high level of rates in a number of Scottish areas which, of course, is affecting jobs. I am sure that my hon. Friend is also aware that delegations from those local authorities come to Ministers to complain about unemployment, then go back to the regions, increase rates by more than 40 per cent. and wonder why unemployment is increasing.

Mr. Harry Ewing: Will the Minister make clear to the CBI that, even in Scottish regions where local authorities have seriously cut services—for instance, in the Borders region—the level of rate increases are still of the order of 38 per cent. or 39 per cent.? Does he not accept that it is the Government's policies which

are damaging industry in Scotland and that basically it has nothing to do with the local authorities?

Mr. Fletcher: The point is that rates increases in Conservative authorities are considerably less than rates increases in Labour authorities.

Dundee (Employment Prospects)

Mr. Gordon Wilson: asked the Secretary of State for Scotland if he will take steps to improve the employment prospects of Dundee.

Mr. Alexander Fletcher: Our policies are aimed at creating a soundly-based economy in which industry can expand and provide jobs in Dundee as elsewhere. The changes we have made in regional policy are designed to concentrate support in the areas of greatest need, and we have placed Dundee in the highest category of these.

Mr. Wilson: Will the Minister give a progress report on his assurances to a recent delegation about the continued future of the Robb Caledon shipyard? Can he also state what positive efforts he is taking to try to improve the amount of employment in the Dundee area, where the economy is precariously balanced at the present time?

Mr. Fletcher: In addition to retaining special development area status, the Scottish Development Agency is actively at work in Dundee. It is important to point out that the picture there is not entirely gloomy and that some new prospects and new jobs have come to the area and have been announced in recent weeks. Indeed, the district authority has recently announced that a number of American companies have made inquiries about the possibility of establishing operations there.

Mr. Peter Fraser: Will my hon. Friend take note that during the last three months of Tory control of Dundee, male unemployment, which has always been a significant problem, has dropped? Will he persist in his efforts—such as those in respect of the unique photographic technique firm which is being brought to Dundee—which will do very much more to bring jobs to that vital part of Scotland than all the shrill cries for militancy which emanate from the Opposition?

Mr. Fletcher: My hon. Friend is correct. In recent weeks, there have been a number of encouraging inquiries and business expansions. Commercially viable projects in that area, in addition to Robb Caledon, will continue to have the fullest Government support.

Mr. Ernie Ross: Will the Minister comment on the survey carried out among industrialists in the Dundee area by Dundee university, which revealed that rates came thirteenth in the list of reasons which attracted industry to Dundee? Is he aware that, items which came high up in the list included housing, education and a pool of skilled labour—all the items which the convenor of COSLA is now cutting back?

Mr. Fletcher: I am not surprised that incoming industry is more interested in skilled labour, housing and general infrastructure than rates of grant, if that is what the hon. Gentleman is suggesting. However, I have not seen the report to which he has referred and, therefore, I am unable to comment in any detail.

Gaelic Language

Mr. Donald Stewart: asked the Secretary of State for Scotland if he will seek to provide full official recognition to the Gaelic language in parity with the position accorded to the Welsh language.

Mr. Younger: I fully appreciate the importance of the Gaelic language, and will do what I can to encourage its use where appropriate.

Mr. Stewart: I thank the right hon. Gentleman for that reply. Is he aware that one of his Friends recently said that Gaelic is not one of the indigenous languages of Scotland, and that a Labour Member said that the number of Gaelic speakers was falling? Both those statements are totally inaccurate. I thank him for the assistance which he was able to give to An Comunn Gaidhealach, but does not he think that it is now time that the Gaelic language was put on a proper, official footing?

Mr. Younger: I am grateful to the right hon. Gentleman, and, although I do not share with him a knowledge of Gaelic, I share with him an appreciation of its importance to many people in Scotland. As to it being officially recognised, there is no difficulty in using the Gaelic lan

guage in courts—such as in giving evidence and so on—and care is always taken, where appropriate, to ensure that interpreters are present. I think that that is the right way to approach the matter.

Mr. Maclennan: Is the Secretary of State aware that if he does not come to grips with the need to tackle the land use question in the Highlands, not only will there be no Gaelic speakers in the area but there will also be no English speakers either?

Mr. Younger: I do not really think that the absence or presence of compulsory powers for the Highlands and Islands Development Board has anything much to do with the encouragement of the Gaelic language.

Mr. Russell Johnston: Does the Secretary of State recall receiving Mr. Donald MacCuish of An Comunn Gaidhealach along with the right hon. Member for Western Isles (Mr. Stewart) and myself, and his description of the precarious position of Gaelic? Once a language dies, it cannot be brought back. Surely he agrees that a language which is in such a dangerous position requires more Government assistance and not less.

Mr. Dalyell: Why does not the hon. Gentleman go on hunger strike?

Mr. Younger: I appreciate the hon. Gentleman's concern. He may be aware that the total support which is given from public sources to Gaelic, including that from the Arts Council, is about £100,000 a year. I think that that is a fair measure of the importance which we attach to it.

Educational Institute of Scotland

Mr. Canavan: asked the Secretary of State for Scotland when he expects next to meet representatives of the Educational Institute of Scotland.

Mr. Alexander Fletcher: My right hon. Friend has no plans for such a meeting at present.

Mr. Canavan: Why is it that, despite several requests from myself and other hon. Members, the Minister has failed to make a statement about the recent crisis in Scottish education following the disastrous Clegg report? Instead of behaving with such dumb insensitivity, will


the Minister give an assurance that the Government will not stand in the way of a fair wages settlement for Scottish teachers, even if it means giving extra rate support grant to local authorities?

Mr. Fletcher: I do not know where the hon. Gentleman has been, but he should know that the Clegg report, which came out at the beginning of April, was settled by the Scottish Teachers Salary Committee before the end of April. I believe that reflects great credit on both sides of the STSC. It may not say much for Clegg, but it says a lot for the negotiating machinery in Scotland.

Mr. Bill Walker: When my hon. Friend next meets the Educational Institute of Scotland will he ask it to acknowledge that if teachers wish to continue to use outside professional analogues in pay negotiations, they should behave like professionals, and what is more, they should go to work looking like professionals?

Mr. Fletcher: There are enough problems in education in Scotland without laying down the style which teachers should use for their dress. Certainly, some teachers have behaved quite irresponsibly during the past few weeks, but the vast majority have continued with their work and have appreciated the settlement which has been reached.

District Councillors (Guidance)

Mr. Eadie: asked the Secretary of State for Scotland what new circulars giving guidance to newly elected district councillors he intends to issue.

Mr. Rifkind: None. It is our policy to issue only essential circulars to local authorities, and I know of no need for circulars to individual district councillors of the kind proposed.

Mr. Eadie: Does the hon. Gentleman realise that he has given great offence today to the Lothian region? It is a matter of simple geography that Edinburgh does not comprise all the Lothians. If the hon. Gentleman looks at the local election results, he will discover that in West and East Lothian his party was slaughtered and that in Midlothian there is not even a Conservative on the council. If the hon. Gentleman should consider amending the decision about sending cir

culars to newly-elected councillors, will he consider following the dictum of his right hon. Friend, who believes that leaders of nations should respond to public opinion? Why does not the hon. Gentleman respond to the ballot box and change the policy which the Government are at present pusuing so disastrously?

Mr. Rifkind: The hon. Gentleman ought to check his information. He will appreciate that in the Lothian region the Labour Party hardly won a seat from the Conservative Party, and that any successess it had in West Lothian or Midlothian were entirely at the expense of the Scottish nationalists. If the hon. Gentleman is concerned about the public's views, he should appreciate that the Government were given a mandate for their economic strategy at the general election. Unless he subscribes to the doctrines of the Scottish National Party, the only party to believe in a separate Scottish mandate—whose views have been rejected by the Scottish public on every occasion during the past 12 months—he should realise that the Government's mandate is extant.

Mr. Henderson: Does my hon. Friend recall that the Labour Party has never had a majority in Scotland? Does not my hon. Friend agree that if the Labour Party wants the Conservative Party to maintain its majority in Scotland, it should oppose the implementation of the Tenants' Rights, Etc. (Scotland) Bill?

Mr. Rifkind: My hon. Friend is correct. Since the last war, the only party to gain the majority of the popular vote in Scotland has been the Conservative Party.

Mr. Grimond: May I congratulate the Minister on his determination not to give any guidance to local councils? Does not he accept that that would certainly be wrong? Should he be tempted to do so, will he put a sentence piece on the bottom of all such circulars saying that his advice should be disregarded in all circumstances?

Mr. Rifkind: The Government have great sympathy with that view. During the last year of the previous Administration 500 circulars were issued. We have issued only 200 circulars in our first 12 months in office. We are seeking to reduce the amount of unnecessary advice that is given to local authorities.

Mr. George Robertson: Does not the Minister think that local councils should be given advice on how to understand the Government's arithmetic? Did he not say earlier that COSLA was quite happy with the shortfall of £93 million in this year's cash limit, which is intended to cover the cost of inflation? Does he not realise that I received a letter from the secretary of the convention stating:
 The opinion of the Convention that the cash limit was totally inadequate has therefore been confirmed.
Is there not a case for saying that the Government's arithmetic is different from that of everyone else?

Mr. Rifkind: The hon. Gentleman's hearing is somewhat deficient. I said that the convention was satisfied that the Government's cash limits—however inadequate the convention might consider them—were enormously more realistic than those provided by the Labour Administration.

Unemployment

Mr. William Hamilton: asked the Secretary of State for Scotland "if he will make a statement on the unemployment situation in Scotland; and when he expects the numbers of unemployed to decline.

Mr. Younger: The present very high level of unemployment reflects a number of factors which were already evident in the situation we inherited a year ago, notably growing weaknesses in our industrial performance and a rising level of wage settlements. A permanent improvement in the employment situation turns upon the establishment of a sound economy, and it is to this end that our policies are directed.

Mr. Hamilton: Does the right hon. Gentleman recognise that the recent report of the industrial trend survey, undertaken by the CBI, is deeply pessimistic on almost every ground? Does not he accept that it is pessimistic about investment, the number of firms working at under capacity and so on? Does he not further recognise that, given that there are over 200,000 unemployed in Scotland and only 20,000 notified vacancies, 11 men are chasing every job? Does he agree with his hon. Friend when he said that that

trend is expected to improve within the next year?

Mr. Younger: I share the hon. Gentleman's concern about all the figures that he mentioned. I have studied them carefully. They are sombre figures that should be considered carefully. With respect, may I ask him to remember that those figures are the result of policies that have been maintained for many years and have weakened British industry. Perhaps he and his hon. Friends could do something to discourage next week's ill-fated day of action. That day of action has no relevance, and will probably weaken still further some of the small firms, which Labour policies sought for so long to destroy. Perhaps he will persuade Labour authorities to ease rate increases. That might do more to save unemployment than all the talking he may do.

Mr. Sproat: Will my right hon. Friend give an assurance that there has been no slippage in the programme of dispersal of Civil Service jobs to Scotland? Will he include confirmation about the number of jobs affected, and the time of dispersal?

Mr. Younger: I am grateful to my hon. Friend, who has shown continuing interest in this subject. Our policy is perfectly clear, and is proceeding on course.

Mr. Harry Ewing: If the Secretary of State is so concerned about jobs in Scotland—he has claimed that rate increases lead to reductions in the number of jobs—will he say what is causing a reduction in the number of white collar jobs, particularly in New St. Andrews House? How far has he gone along the road to paying off the 1,400 civil servants under his control? Is not he committed to dismiss those civil servants during his period of office?

Mr. Younger: The hon. Gentleman should know better than any other hon. Member that redundancies have arisen as a result of the profligate overspending that he indulged in for five long years. He planned to spend all that extra money without giving a thought as to where it would come from. We are trying to put that right. I am looking in vain to see any sign of a blush on the hon. Gentleman's face.

Campbell and Cosans v the United Kingdom

Mr. Dalyell: asked the Secretary of State for Scotland, in the light of the letter to the secretary of the Scottish Education Department, Mr. Angus Mitchell, of 8 April, from Mr. John Pollock, secretary of the Educational Institute of Scotland, and the reply by the Scottish Education Department on 17 April, if he will make a statement on his meeting with the Educational Institute of Scotland about general issues, widely known to relate to the case of Campbell and Cosans v the United Kingdom.

Mr. Alexander Fletcher: The meeting between the institute and my Department will be held on 9 May. I am not in a position to make any statement at present.

Mr. Dalyell: Does the hon. Gentleman think that one side of an argument should be heard and the other unheard?

Mr. Fletcher: Both sides of the argument were heard during proceedings before the European Commission. Those discussions are confidential, and parties are not at liberty to divulge any details of the proceedings.

Mr. John MacKay: Does my hon. Friend realise that the Scottish teaching profession is concerned about the way in which it is being pilloried, without a proper defence and without ensuring that its case has been put? Does not he accept that it is difficult to maintain discipline in schools and that the profession believes that the strap is an important part of that discipline?

Mr. Fletcher: My hon. Friend's points are correct. The Government's representations before the Commission sought to refute, on behalf of all citizens, the applicants' claim that the United Kingdom was in contravention of the Convention on Human Rights.

Scottish Confederation of British Industry

Mr. Lang: asked the Secretary of State for Scotland when next he plans to meet representatives of the Scottish Confederation of British Industry to discuss the progress of the economy.

Mr. Alexander Fletcher: I refer my hon. Friend to the reply I gave earlier to

my hon. Friend the Member for Leek (Mr. Knox).

Mr. Lang: When my hon. Friend meets the leaders of the CBI, will he thank them for their steadfast support of the Government's economic policies? In Particular, will he thank them for their support of the Government'? overriding aim of eliminating Socialist inflation? Will he take hope from the headline that appears in today's issue of The Scotsman? It states:
 Inflation outlook rapidly improving. Raw-material price rises slow ".
Will he persevere with that policy?

Mr. Fletcher: The Government are determined to persevere with their economic policies. The CBI has taken a realistic view and I wish that its opposite numbers in the STUC took a similarly realistic view. At the moment, they live in cloud—cuckoo—land, and are urging demonstrations that will take workers away from employment.

Mr. McKelvey: Has the CBI made the Minister aware that a growing number of firms in Scotland—particularly in Ayrshire—are on the short-time working compensation scheme? Does not he accept that, as the Government have reduced that scheme from one year to six months, the latter period is now expired in many cases? Does he not accept that, unless that scheme is extended, there will be a lot of redundancies in many of those firms?

Mr. Fletcher: As the hon. Member says, the scheme is of a temporary nature and seeks to help companies that are trying to overcome a short-term difficulty. We cannot continue to support companies that are no longer viable

White Fish Authority

Mr. Pollock: asked the Secretary of State for Scotland whether he has any plans to meet the chairman of the White Fish Authority.

Mr. Younger: I have no immediate plans to meet the authority's chairman, but would hope to have an opportunity of doing so on an appropriate occasion.

Mr. Pollock: When my right hon. Friend has such a meeting, will he discuss with the chairman the alarming evidence of flagrant breaches in Common


Market regulations concerning the catches of mackerel and herring? Is he in a position to give any assurance that the Government intend firmly to back the interests of Scottish fishermen against lawbreakers?

Mr. Younger: I am grateful to my hon. Friend for that question. I discuss this subject whenever I meet anyone in the fishing industry. As I have said, we take care that every piece of evidence given to us is brought together and forwarded to the Commission. The Commission then knows what is going on. We have sent a copy of the film, shown in a recent " World in Action " programme, to the Commission, so that it can see that as well. We shall do all that we can to support the Scottish fishing industry.

Mr. Donald Stewart: Is the right hon. Gentleman aware that lobster fishermen in Uist are in a serious position? What arrangement can be made for fishermen outside a producer organisation to receive finance as a result of the Government's recent award to the fishing industry? Is there any possibility that such fishermen might receive assistance?

Mr. Younger: As the right hon. Gentleman knows, aid is channelled through the producer organisations. Where such a producer organisation exists, discussions should take place through it.

Mr. George Robertson: Is not the right hon. Gentleman aware that the recent " World in Action " programme was not the first source of an allegation against foreign fishermen for breach of EEC regulations? When may the fishing industry expect to see action being taken against such flagrant breaches? Is it not time that action was taken, rather than hearing about talks, or television programmes?

Mr. Younger: I appreciate the hon. Gentleman's concern in this matter. He may be interested to know that during 1979, of 18 foreign skippers prosecuted for illegal fishing in United Kingdom waters, 17 were convicted. So far this year, eight foreign skippers have been prosecuted and all have been found guilty. Therefore, we are taking action wherever we can.

Oral Answers to Questions — JURY SYSTEM

Mr. Dubs: asked the Solicitor-General for Scotland if he is satisfied with the working of the jury system in the Scottish courts.

The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): I am quite satisfied with the working of the jury system in Scottish courts, but I believe it can be improved further by the implementation of the proposals contained in the Criminal Justice (Scotland) Bill, clauses 23 and 24 respectively, which seek to reduce the number of peremptory challenges to jurors from five to one and which allow for the provision of meals and refreshments to the jury in appropriate circumstances while they are considering their verdict. No other changes in the system are being considered.

Mr. Dubs: Given that there is no jury vetting in Scottish courts, will the Solicitor-General use his influence with his colleagues the Attorney-General and the Home Secretary to persuade them that in this respect England should follow the Scottish example?

The Solicitor-General for Scotland: England did, after 500 years, follow the Scottish example in having majority verdicts. Perhaps, if it were to increase its majority, it would find the benefit and discover that jury vetting was unnecessary. I do not wish to interfere in the law of England, but I think that we have immense benefits in not having jury vetting, and we shall not have jury vetting in Scotland so far as I am concerned. I shall constantly bring to the attention of the English Law Officers my opinions on the benefits of the law of Scotland, as I am sure they will bring to me their opinions on the benefits of the law of England.

Mr. Peter Fraser: Is my hon. and learned Friend satisfied that the number of people who are cited for jury service at High Court diets in Glasgow is not excessive? Is he not concerned that too many of them are having to waste a considerable number of days attending in Glasgow without ever being asked to sit on a jury?

The Solicitor-General for Scotland: I am grateful to my hon. Friend for asking that


question. I am extremely concerned about the time that jurors and, indeed, witnesses spend in court unnecessarily. I am doing all in my power to prevent jurors from being called unnecessarily, waiting around unnecessarily and then having their services dispensed with. It is essential that, when the public come into contact with the law, their experience should not be one of inconvenience.

Mr. Russell Kerr: Will the Solicitor-General use his extensive influence with the British Home Secretary to see whether we can do something about extending to England and Wales the benefits of the Barlinnie special unit—which was exploited and developed by the Conservative Party in Scotland and which so far is hiding its light under a bushel?

The Solicitor-General for Scotland: All I can say is that it is a very small bushel.

Mr. Sproat: Will my hon. and learned Friend tell the House what the legal situation would be in Scotland if a member of a jury tried to sell to a newspaper an account of what had happened within the jury room?

The Solicitor-General for Scotland: I should prefer not to comment on that in advance of its happening. I sincerely hope that it will not happen. I know the views I would hold about it if it should happen.

Mr. Harry Ewing: Are we to take it from the Solicitor-General's original answer that he intends to stick to his proposal on the reduction of peremptory challenges from five to one? If he intends to stick to that proposal, is there not a strong possibility that there could easily be jury veting if the number of peremptory challenges is reduced in such a fashion?

The Solicitor-Genral for Scotland: I think that the hon. Gentleman would do well to read the case of M. v. Her Majesty's Advocate and to see what the view is in Scotland, if anyone wishes to make challenges on allegedly cause shown. The hon. Member will find the remarks of the learned judge in 1974 SLT, page 25. I trust that he will read them before the matter is discussed further.

Oral Answers to Questions — COURT OF SESSION

Mr. Gordon Wilson: asked the Solicitor-General for Scotland when next he will meet the Lord President of the Court of Session.

The Solicitor-General for Scotland: I have no immediate plans to meet the Lord President of the Court of Session, but my noble and learned Friend the Lord Advocate and I have meetings with him from time to time when necessary.

Mr. Gordon Wilson: I am grateful to the Solicitor-General for that reply. As the Royal Commission investigating the legal profession has recommended the transfer of divorce actions from the Court of Session to the sheriff court, will the hon. and learned Gentleman have an early meeting with the Lord President to prepare the rules of court and the Acts of Sederunt that might be required so that these transfers can take place swiftly, without being sabotaged by the Faculty of Advocates which has a vested interest?

The Solicitor-General for Scotland: The Government will consider all the recommendations of the Royal Commission and act upon them as they think fit. I think that it is early to prepare Acts of Sederunt for something that has not been decided.

Mr. Dewar: Will the Solicitor-General discuss urgently with the Lord President the imminent report of Lord Cowie's working party on divorce procedures with a view to urging on the Lord President that it would be monstrous and wrong for any important or significant change to be made by fiat, by Act of Sederunt, in divorce procedures, before this House and other interested bodies have had a chance to consider the interesting recommendations in the Royal Commission's report published today? Will he try to ensure that Lord Cowie's report is published and that there is proper public discussion before any decisions are taken?

The Solicitor-General for Scotland: Yes. This is an important matter and it will be discussed. Lord Cowie's report to the Lord President is on the present law and on ways of improving it and of making the procedure more slick and cheap. That has nothing to do with the


other question which the hon. Gentleman is confusing with it.

Oral Answers to Questions — FACULTY OF ADVOCATES

Mr. Canavan: asked the Solicitor-General for Scotland when he expects next to meet representatives of the Faculty of Advocates.

The Solicitor-General for Scotland: I have no plans to meet representatives of the Faculty of Advocates officially, although I meet the officers and other members of the faculty from time to time.

Mr. Canavan: Will the Solicitor-General take a few hints from some of his more enlightened brother trade unionists in the faculty who are opposed to some of the more Draconian measures in the Criminal Justice (Scotland) Bill? In particular, will he say whether there could be charges of carrying an offensive weapon or carrying liquor into a prohibited place if the Solicitor-General were to go to a football match with his pearl-handled hollow walking stick filled with a secret refreshment for half time?

The Solicitor-General for Scotland: I am obliged to the hollow Member for those remarks. He will notice that the Faculty of Advocates was set up to protect the public against those who are union members, not the other way round. Nevertheless, I think that it will be important for the hon. Gentleman, whose rigid views I tolerate and respect, to note that the views of his colleagues who are serving on the Committee considering the Criminal Justice (Scotland) Bill have changed dramatically since they supported identical proposals from the Opposition side.

Mr. Peter Fraser: When my hon. and learned Friend meets members of the Faculty of Advocates will he point out that it is not in their long-term interests to resist the movement of divorce proceedings away from the Court of Session? Will he also consider carefully whether a simple transfer to the sheriff court is truly the proper long-term answer to the problem?

The Solicitor-General for Scotland: Yes. I am obliged to my hon. Friend for asking that question. A number of

factors are involved. We are concerned to ensure that, in the matter of consistorial cases, the public have the greatest benefit and the best system at the least price.

Oral Answers to Questions — CAMPBELL AND COSANS V. THE UNITED KINGDOM

Mr. Dalyell: asked the Solicitor-General for Scotland what study he is making of the principles of law involved in the regulations of confidentiality imposed by the convention on human rights and fundamental freedoms, with regard to the proceedings of the Commission on Human Rights, sitting in Strasbourg and Edinburgh, arising out of a possible settlement of the case of Campbell and Cosans v. the United Kingdom; and if he will take steps to make sure that interested parties, such as the Educational Institute of Scotland, can be consulted on matters which will be of professional importance to them before final decisions are made.

The Solicitor-General for Scotland: No special study of the principles of law involved in the matter referred to by the hon. Gentleman is required. The law is, I think, clear and the rule of confidentiality is recognised to be essential for the efficient operation of the Commission's functions.

Mr. Dalyell: Why is it essential?

The Solicitor-General for Scotland: Because it is a matter of agreement between Governments. Many of those who are complaining are convicted criminals and confidentiality is believed to be essential.

Oral Answers to Questions — CRIMINAL JUSTICE (SCOTLAND) BILL

Mr. Lang: asked the Solicitor-General for Scotland when next he plans to meet the president of the Law Society for Scotland to discuss the Criminal Justice (Scotland) Bill.

The Solicitor-General for Scotland: My right hon. and learned Friend the Lord Advocate and I have regular contact with the president and secretary of the Law Society of Scotland, either in person or


by correspondence. On a number of those occasions aspects of the Criminal Justice (Scotland) Bill have been considered. However, neither my right hon. Friend nor I have any firm date at present to meet the president of the society to discuss the Bill.

Mr. Lang: When my hon. and learned Friend next meets the president of the Law Society, will he thank the society for the careful work that it has done in scrutinising the Criminal Justice (Scotland) Bill and for the general welcome that it has afforded to this important measure?

The Solicitor-General for Scotland: Indeed I will. We are grateful for the careful work that the society has done on the Bill and for the comments that it has made. Its work and comments have been of great assistance to us.

Mr. Harry Ewing: Would it not be a misrepresentation if the Solicitor-General were to thank the Law Society for the general welcome that it has given to the Bill? Is it not a fact that the Law Society, like the Faculty of Advocates and the Glasgow Bar Association—unlike myself—has the strongest possible reservations about the Bill? Those hon. Members who are considering the Bill in Committee who are lawyers should pay more attention to what their colleagues in the legal profession are saying.

The Solicitor-General for Scotland: No, Sir.

QUESTIONS TO MINISTERS

Mr. Dalyell: On a point of order, Mr. Speaker. I gave notice of a point of order, and in raising again a point of order with you I make an apology to the Chancellor of the Exchequer and others who have come into the Chamber for the public expenditure debate. However, some delicate and rather fundamental issues are involved concerning the relationship of the House with Downing Street and the arbitrary blocking of parliamentary questions by diktat of the Prime Minister.
To be fair, the Prime Minister has been very good about not transferring parliamentary questions—

Mr. Speaker: Mr. Speaker Order. The right hon. Lady the Prime Minister may be very good, but the hon. Member for West Lothian (Mr. Dalyell) must put a point of order to me, to which I must reply.

Mr. Dalyell: My point of order is that the right hon. Lady's actions in relation to Diego Garcia are out of character with her attitude to parliamentary questions hitherto, which in itself may be a cause for suspicion—

Mr. Speaker: Order. The hon. Gentleman is not entitled to use a point of order to argue a case and express his views about the Prime Minister's reasons for her actions. If there is a point of order on which I can rule, I shall be grateful if the hon. Gentleman, who is well experienced, will submit it to me.

Mr. Dalyell: I am asking for your protection, Mr. Speaker, against arbitrary decisions by a Prime Minister in a particular instance to block questions that may be conceived as being inconvenient to her. If I am to be coherent, I shall have to explain a little of the background.
As you will recollect, Mr. Speaker, at about 2.30 pm on Tuesday 29 April I handed the following question for oral answer to the Lord Privy Seal for Wednesday 14 May. The question was:
 to ask the Lord Privy Seal at what point he or Her Majesty's Ambassador in Washington was informed of the United States intention to use the Anglo-American bases at Diego Garcia "—

Mr. Speaker: Order. Is the hon. Gentleman seeking to read out—I have, by the way, had no notice of this—a question that was disallowed at the Table Office? If it was disallowed, he cannot read it out. If it was approved, it is in order to read it to me.

Mr. Dalyell: At 10 o'clock this morning I gave notice in the normal way to the Table Office of precisely the issue that I intended to raise as a point of order. I shall not read out the whole—

Mr. Speaker: Order. I must inform the House that no hon. Member is giving me notice when he gives notice to the Table Office. I have my own office. If the hon. Gentleman wishes to give notice of a point of order, he should contact my office.

Mr. Dalyell: The last thing that I wish is to be discourteous in any way to you, Mr. Speaker. There has been a genuine misunderstanding. Following the oral question No. 1 to the Prime Minister tabled by my hon. Friend the Member for Eton and Slough (Miss Lestor), the following blocking answer was received from the right hon. Lady:
 However, if it comes to organising a rescue operation, any country that was thinking of it would be very ill-advised to reveal it, even in confidence, to a large number of other nations.
Her response to my hon. Friend was as follows:
 With regard to the hon. Lady's first point, I do not wish to get myself into a position where I have to confirm or deny movement through allied bases."—[Official Report, 29 April 1980; Vol. 983, c. 1144.]
As you will recollect, Mr. Speaker, I raised with you privately the legitimacy of the Prime Minister's block on questions. I was the hon. Member to whom you referred in your ruling on I May. You said to my hon. Friend the Member for Workington (Mr. Campbell-Savours):
 I have already ruled privately to one hon. Member who wrote to me on this matter. It will, therefore, be out of order for supplementary questions that would not be in order for the Order Paper to be put on this question to the Prime Minister or, indeed, to any other Minister concerning movements in such bases "—[Official Report, 1 May 1980; Vol. 983, c. 1641.]
You amplified that point, Mr Speaker, in your courteous letter to me on 1 May.
Yesterday, Mr. Speaker, in your ruling, you told me:
 Any question on this subject must therefore be tested against that refusal by the Table Office and, if the question is referred to me, by myself. Obviously I cannot rule on particular questions until I have considered them, and I am sure that the House would not expect me to comment on any hypothetical questions that hon. Members might have in mind."—[Official Report, 6 May 1980; Vol. 984, c. 35–36.]
So, Mr. Speaker, explaining to the Table Office Clerks candidly exactly what I was up to, I tabled the following question for Friday 9 May to the Secretary of State for Defence:

 whether he will list the route and stopping points used by Hercules aircraft carrying vehicles for the Cambodian relief operation, listing the dates on which it stopped in Cyprus.
That question was accepted by the Table Office and it remains on the Order Paper. How is it that, since Cyprus is an allied base, that innocent question stands, while the less innocent question on Diego Garcia falls? Is there one rule for questions about what are arguably British bases, and another rule for what would be called Anglo-American bases? If so, it would be a service to the House to make it explicit before we go further along the lines of discussion on the siting of cruise missiles in East Anglia.
If a Prime Minister resorted to a blocking device for overriding reasons of our relations with other countries, I would not complain too much. However, it can hardly be said by a Prime Minister who is hell-bent on sanctions against Iran that she does not want foreknowledge of the use of British territory to embarrass out relations with the Iranians. If that was what she was concerned about, she would not be—

Mr. Speaker: Order. The reasons for the Prime Minister's statements are her own affair and not mine. I cannot rule on the reasons for the Prime Minister's statement. I am listening with care to the hon. Gentleman because I want to do him the courtesy of hearing him out. He treats me with courtesy, as do all hon. Members, for which I am grateful.

Mr. Dalyell: It looks as if the block has been imposed to avoid political embarrassment at home. The truth is emerging that it is inconceivable that the Prime Minister did not know about the American operation in the Iranian desert.

Mr. Speaker: Order. I promise to consider the point that the hon. Gentleman has made. The whole House has the substance of his point of order, namely, whether there is a blocking and whether I can do something about it. That is the question. I shall examine it and make a statement tomorrow.

CHILD CARE (SCOTLAND)

3.39 p.m.

Mr. Allen Adams: I beg to move,
That leave be given to bring in a Bill to define the grounds on which local authorities in Scotland can assume parental rights; and for connected purposes.
You will well remember, Mr. Speaker, my first attempt to introduce legislation into the House. At that stage the vast majority of right hon. and hon Members rose from their places and walked out. With that in mind, I am attempting to tailor this piece of proposed legislation to suit the more discerning of hon. Members. I note that they have all remained in their seats.
The purpose of the Bill is simple and specific. It is an attempt to make more specific a law that I believe to be vague and too open to subjective opinion. I refer, of course, to the right that local authorities have at present to assume the parental rights of a child where they consider that that child is at risk.
At the outset I reiterate that I do not think that these powers are abused, by and large. However, there is a phrase in present legislation that is open to abuse, although it is not generally abused. At present the law says that the local authority may assume the parental rights of a child where it considers that the habits and mode of life of the parents are not conducive to the proper upbriging of the child. What does that phrase mean? The phrase " habits and mode of life " of the parent would mean a different thing to you, Mr. Speaker, and to me. It would mean something slightly different to every hon. Member in the House. In other words, it it is far too vague and far too open to interpretation. Although it is rarely abused, it could be abused, and I know certain cases in which it has been used simply to take a child away from a domestic situation because the social worker involved has basically disagreed with the life-style of the parents.
Frankly, that is not good enough. Taking a person's child away from him or her is a major and sometimes irrevocable step. There should be no grounds for subjective opinion. Of course, there always will be subjective opinion, but as far as possible we should seek to remove it and replace it by fact. I suggest that

the phrase " habits and mode of life " is far too open to opinion and abuse, and therefore should be removed from the law and substituted with certain specific grounds.
Local authorities should not be able to assume the parental rights of the child unless they have a clear-cut specific case that they can spell out clearly in court. The first ground would be the failure to nourish the child; the second, the failure to clothe the child; the third, the failure to educate the child; the fourth the failure to provide shelter for the child. The fifth and sixth grounds would be deliberate physical maltreatment and deliberate mental or psychological maltreatment of the child.
I also wish to include another ground, which would spell out quite clearly that it is not acceptable to society for parents to abandon young children, particularly those under 5 years of age, on the streets after 9 or 10 o'clock at night. Regrettably, one can walk around many of our major cities and see very young children—children of 2, 3 or 4 years of age—roaming the streets of our major housing estates very late into the evening. That is not civilised behaviour. Animals in the fields do not behave like that, and it is quite legitimate for the House to say that that is not acceptable behaviour, but is, in fact, a statutory offence. In fact, if it occurred on more than three occasions after counselling, it should be said that the parents relinquished the right to look after their child. Quite clearly, by abandoning that child in the street they have already relinquished that right.
Taking someone's child into care is a major step, and very often it is a bigger and more serious problem than people imagine. At present, in Scotland, between 60 and 70 children are taken into care each month. In other words, we are assuming the parental rights in 60 or 70 cases a month. That is a very serious situation. When we do that we must have clear and specific grounds for so doing, and there should be as little room for error as possible.

Question put and agreed to.

Bill ordered to be brought in by Mr. Allen Adams, Mr. Raymond Ellis, Mr. Harry Greenway, Mr. William McKelvey, Mr. Ernie Ross, Mr. James Hamilton, Mr. Ron Brown and Mr. Norman Hogg.

CHILD CARE (SCOTLAND)

Mr. Allen Adams accordingly presented a Bill to define the grounds on which local authorities in Scotland can assume parental rights; and for connected purposes. And the same was read the First time: and ordered to be read a second time upon Friday 4 July and to be printed. [Bill 202].

PUBLIC EXPENDITURE

Mr. Speaker: I have selected the amendment in the name of the Leader of the Opposition.

The Chancellor of the Exchequer (Sir Geoffrey Howe): I beg to move,
That this House takes note of the White Paper on the Government's Expenditure Plans 1980–81 to 1983–84 [Cmnd. 7841].
As the House knows, the purpose of the debate is to consider, in accordance with tradition, the Government's spending plans for the years 1980–81 to 1983–84 as set out in our recent White Paper. That White Paper completes the review of the plans inherited from the last Government. There is particular value in the debate today in relating those spending plans to the Government's economic strategy as a whole, of which they form an important part. There are several reasons for approaching the matter in that way.
First, we have made it clear on many occasions that it is necessary to reverse the inexorable growth of public spending and to bring its level down. That is what the White Paper is about. Our approach to the reduction of public spending contrasts sharply with that of the last Government. Their approach was impulsive, unintended and unsustained. Our plans show for the first time the prospect of a progressive reduction in total public expenditure throughout the lifetime of a Parliament. The importance of that sustained reduction in public spending is that it is one of the key elements in a wider strategy for lightening the burden imposed by a Government, for shifting the balance of resources back to the private enterprise sector, for reducing public sector borrowing, interest rates and taxes, and, above all, for mastering inflation. It is self-evidently right to consider public spending plans in the wider context of our economic strategy.
The second reason for saying this is that we can fairly claim that in the presentation of the Budget we have gone much further than any previous Administration in enabling the House to consider all the elements of the Government's economic strategy as a whole. This simultaneous presentation, together with the full exposition of the Financial Statement and Budget Report of the Government's


medium-term financial strategy, has equipped the House more fully than on any previous occasion for a full examination and debate of our economic strategy as a whole.
Finally, the House also has before it the interesting report of the Treasury and Civil Service Select Committee. The House should note that that report seeks to deal not just with the Expenditure White Paper but with the Budget, and Budget documents as a whole. One has admiration for the members of the Committee who produced it, in the light of the diverse analyses provided for them by the crowd of expert advisers that Committees now trail in their wake. That is a remarkable achievement by the Committee. It has produced a report in the light of the necessarily condensed discussions that it had with myself and Treasury and other witnesses who appeared before it.
I pay tribute to the Chairman of the Committee, my right hon. Friend the Member for Taunton (Mr. du Cann) and the other members for the speed with which they produced the report.. I am sure that it will guide the House towards some of the more important questions arising in this debate. I am personally gratified to note that at the beginning of the report the Committee has resoundly endorsed the Government's economic policy objectives of reducing inflation and creating conditions for sustainable economic growth. I sometimes wonder whether the Opposition Front Bench goes as far as that.
The Committee offer some criticism of the Government for not providing what it regards as a sufficient basis of information for a reasonable judgment to be made about the strategy. I have some disappointment at that view, as I believe that the Government have gone a long way towards providing just that information. As I said at the outset of my speech, this is the first time that a Government in this country have set out their monetary and fiscal plans for a number of years ahead. I was grateful to hear the right hon. Member for Ashton-under-Lyne (Mr. Sheldon)—a distinguished member of the Committee and himself a former Treasury Minister-being kind enough to acknowledge, in a television interview on 29 April, that I had been

 more helpful... than most Chancellors have been prepared to be in the past.
I am grateful for a modest tribute from that authority.
The material that we published with the medium-term financial strategy was also sufficient for Messrs. Greenwells, for example, to say that the details and consistency of the analysis stood the test of critical scrutiny. Of course, we are willing and anxious to discuss this with the Select Committee.

Mr. Denis Healey: I am sure that the right hon. and learned Gentleman recalls the Greenwells bulletin that said that it was shattered by the disappointing nature of the results achieved by the right hon. and learned Gentleman in his forward expenditure plan. I shall quote the actual words later. Is the right hon. and learned Gentleman so brazen as to ignore that comment by Greenwells?

Sir G. Howe: Indeed, I am fortified by it. As the right hon. Gentleman quoted a comment to the effect that the expenditure plans did not go far enough, I hope that we can count on his support for further robust onslaughts on public spending.
Of course, the Government are willing and anxious to discuss with the Select Committee the extent to which, and the way in which my Department and I should help it with as much information and insight as we properly can. After all, I think that it was Balfour who said that democracy was government by explanation. The relationship between the Government and the Select Committee is an essential part of that process.
I venture to express the hope that the Select Committee will be mindful in a particular case, for example, of the reason that it gave for discretion—market sensitivity—as a reason for not disclosing the Government's quantitative view of the corporate sector deficit. That is a point about which we are on common ground I suggest that the same point may well be relevant in other places.
I hope that the Committee will also be conscious of the reasons given by my distinguished predecessor for not offering, for example, any medium-term Treasury forecasts of the level of unemployment. I suspect that if we examine each par


ticular case about which the Committee seeks information, and if we analyse each case by reference to principles of that kind, it should be possible to lead to agreement between the Select Committee and myself on the great majority of issues that arise. On this occasion, of course, we were examining, over a short period, a large number of issues that we were not able to analyse as fully as we should have liked.
The important point—as, I believe, the Committee appreciates—is that we should have the opportunity of discussing the question of what should, or should not, be forthcoming about the information in a less broad-based way and by reference to particular cases for particular purposes.
I hope that I may take this opportunity—as, of course, I am no longer addressing the Committee, but a wider audience—of uttering a warning against undue preoccupation with prediction and measurement.

Mr. Healey: Oh!

Sir G. Howe: The right hon. Gentleman may well laugh. He should know. However, I utter a warning against undue preoccupation with prediction and measurement of more and more detail at the cost of less and less concern for the essence of the policies themselves.
As I see it, that is the message embodied in the amendment moved to the report of the Select Committee by my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark). I understand why my right hon. Friend the Member for Taunton and his colleagues may have taken the view that the Birmingham amendment did not fit too naturally into the structure of the report at that stage. However, I hope for the sake of the members of the Committee, as well as my own, that all of them had at least a degree of sympathy with the view expressed by my hon. Friend the Member for Selly Oak, who said:
 the basic issues with which this Committee, the House and the country at large are most concerned are the policies the Government are pursuing rather than the fine detail of the documents they publish. In seeking to assess those policies what really matters is to understand the reasoning behind them, the determination and realism with which they were

being pursued and the consistency of the objectives and instruments of policy.
The fact is that forecasts are vastly uncertain. Forecasts are subject to huge margins of error and can at best be no more than speculative. That is true not merely of forecasts of the future but even of measurements of the past. That is why we must beware of the illusion that because Government can control some things, they can forecast, and so control and dictate, almost everything to the ultimate degree. That attitude is reflected in the belief that because the Government, like others, have the means to make forecasts they must therefore, in some sense, be responsible for and capable of promoting or preventing the events to which those forecasts relate. The resulting danger, if we take this process too far, is that people may attribute to Government powers that Government do not, cannot and should not possess; but they will then go on to use that attribution of power to Government as an excuse for irresponsible economic behaviour and so seek, consciously or unconsciously, to slough off on to Government responsibilities that properly rest with the people themselves.
Those are some of the reasons why the forecasts and projections that we offer first in White Paper and then in the Red Book have been presented with a degree of diffidence and with a recognition that every kind of qualification must be attached to them. Those are some of the reasons why the Government's medium-term strategy concentrates on those relatively few elements—responsible management of the public finances—that lie within the power of Government to control.
I cannot too strongly emphasise the extent to which the power of Government—not just in this country, but in this country, perhaps, more than most—is strictly limited by the nature of the economic world in which we must live. It is a rather bleak world to contemplate.

Mr. Roy Hattersley: The Chancellor made the point about omissions of forecasts. What about those gaps in the White Paper that are not matters of forecast but of Government policy? Why has the right hon. and learned Gentleman chosen to give no information whatsoever about the Government's housing intentions? These are


not forecasts; they are indications of what the Government intend to do but keep secret from the country.

Sir G. Howe: I welcome the right hon. Gentleman, I think for the first time, to a debate on the White Paper. It contains full details of the Government's plans for the current year and future years. When the decisions have been taken they will be published.

Mr. Healey: Oh !

Sir G. Howe: The right hon. Gentleman may laugh. He has the grotesque habit of laughing at almost every point that is made. In fact, he should know as well as anyone that decisions about the precise pattern of public expenditure, especially in housing, are subject to decisions by local authorities and local authority associations from year to year. One of the misleading features about previous White Papers has been the extent to which they have sought to convey certainty when no certainty could exist or be portrayed. I was going to say a kindly word about the right hon. Gentleman, if he would forgive that.

Mr. Healey: Never.

Sir G. Howe: When I was in Hamburg a couple of weeks ago I noticed that the Finance Ministers there assembled appeared, to some extent, to miss the right hon. Gentleman's distinctive and inimitable contribution as chairman of the Interim Committee. The Ministers asked me to convey to him their good wishes. At least in one part of the world he is remembered with affection.
At that meeting I was struck, as the right hon. Gentleman must have been previously, by the extent to which none of my colleagues dissented from the view then expressed by the managing director of the International Monetary Fund. It is important that the House should have this in mind. He said:
 The world economic picture is decidedly grim.… Projections for 1980 and 1981 depict a severe worldwide problem of inflation; a general pattern of slow growth of output, with a threat of recessionary tendencies in the industrial world; a sharp slump in the growth of the volume world trade; and a sudden and major worsening of the distribution of current account balances among the major groups of countries—resulting mainly from the ' second oil shock '.

He went on to say:
 The rise of inflation rates in the industrial countries has been both dramatic and widespread. Inflation in the seven major countries accelerated from an average rate of less than 7 per cent. a year in the closing months of 1978 to one of 13 per cent. in late 1979 or early 1980.
That is the background against which the Government's economic strategy has been constructed and the context in which our plans for public spending must be judged. That is why the Government's overriding priority is to reduce the rate of inflation.
The dominant feature of the past 10 years has been the high rate of inflation, not only here but in other industrial countries. It is no accident that the 1970s turned out to be a decade of declining growth and rising unemployment, again not just in this country but throughout the world. It is no accident that that happened, because inflation is bad for growth and bad for unemployment. It inhibits investment and consumption. Until we get it down there can be no prospect of a return to the comparative economic stability—

Mr. Healey: rose—

Sir G. Howe: and prosperity—

Mr. Healey: rose—

Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Order. Sir Geoffrey Howe.

Sir G. Howe: The right hon. Member can hardly suggest that I am unwilling to give way to him. Even he has no right to rise to his feet when I am in the middle of a sentence and expect me to sit down.
To return to what I was saying. Until we can get inflation down, there is no prospect of a return to the comparative economic stability and prosperity of the 1950s and 1960s.

Mr. Healey: The right hon. and learned Gentleman rightly said that the IMF prediction for the average rate of inflation was 13 per cent. for the current year. The rate in this country is 20 per cent., and that is due entirely to the fiscal measures taken by the Government in raising public sector charges and doubling the rate of VAT. How on earth can the right hon. and learned Gentleman expect us to take him seriously in saying


that his aim is to reduce inflation when he has doubled it since he took office?

Sir G. Howe: I understand that the right hon. Gentleman has to strive particularly hard to make points of that kind, but that intervention is unworthy of him. [HON. MEMBERS: " Answer it."] Perhaps he will be patient enough to contain himself and listen to an answer for a change. He knows that the underlying rate of inflation has not risen to that level, and that at the end of 12 months after the increase in VAT that figure will drop out of the index. He knows that the impact of high and rising oil prices is having an effect in the United Kingdom, exactly as it is in every other OECD country. He knows that when we came to office he left us with a rapidly expanding money supply and a rapidly rising rate of price inflation. He, more than most, for two years during his first term at the Treasury was fond of blaming his predecessors for the inflation that he had to deal with. Let him recognise the extent to which we are entitled to do exactly the same.
The next link in our strategy is the commitment to a progressive reduction in the rate of monetary growth. That is now widely accepted as essential if we are to defeat inflation. Inflation cannot indefinitely continue unless monetary growth accommodates it. That is why we have our medium-term financial strategy, providing so plainly for the progressive reduction in the rate of money supply growth over the medium term. That is the basis on which the strategy provides the framework within which inflation, interest rates and taxes can fall over that medium term.
As the Red Book makes clear, it is neither possible nor desirable to set out an exact specification of the path that all the various elements of the economy might be expected to follow under this strategy. We have not tried to do that.
The history of the past decade alone shows clearly enough that it is not within the power of Government to determine output or employment. That is the reason why the strategy is confined to those elements that are within the Government's power to control—public spending, taxation and the money supply. This means that the achievement of the strategy

does not depend upon one particular set of circumstances prevailing. If things turn out differently from the projections underlying the strategy, changes can and will be made to maintain the counter-inflationery thrust of the policy.
That is the importance of our approach. We mean to stick to the monetary targets and the medium-term financial strategy, and we have every reason to believe that we shall succeed in that, because those elements are under our control. There is no question of departing from that money supply policy, because that is now widely seen to be essential to the success of any anti-inflationary policy.
Fiscal policy plays an equally central role in the medium-term strategy. It must be part of our purpose to achieve slower monetary growth without prolonged recourse to higher interest rates. Indeed, we must create the conditions in which interest rates can fall. That is the reason why fiscal policy has a crucial role if the growth of money supply is to be reduced over the medium term. That is why in the financial strategy, we chart a declining path for the public sector borrowing requirement as a proportion of GDP. It is why the heart of the strategy is the relationship between public spending and revenue.
If we had kept to the public spending plans that we inherited it would have been necessary to increase taxes by several pence in the pound even without the benefit of revenue from the North Sea. That would defeat the entire object because high taxes stifle enterprise. We had to plan for a massive reduction in the spending plans of the previous Government if we were to have any chance of putting forward a strategy for reducing inflation while at the same time encouraging enterprise and initiative.

Mr. Bob Cryer: In his first Budget the Chancellor said that the basis of his whole strategy was to encourage enterprise. Since that first Budget, unemployment has inexorably risen. When does the Chancellor expect his tax concessions to the entrepreneurs to start producing the jobs that are the basis of his economic policy?

Sir G. Howe: I have no doubt that the tax changes made in my first and second Budgets are an important factor


in sustaining the willingness of people to invest in this country and to return to this country. I have no doubt that the tax reductions designed to promote enterprise are and were of a kind that would have been wholly unforthcoming had the previous Government been reelected.

Mr. Cyer: When will the jobs come?

Sir G. Howe: The jobs are far more likely to come if we are able to sustain this policy than they would be if the Labour Government had been returned to office. Opposition Members must contemplate the consequence of their actions. Had the previous Labour Government been returned to office, despite all their protestations to the contrary at the last election we should have seen reductions in public spending, increases in taxation, and the curtailment of opportunities in business and enterprise in every direction.
The changes that we have made in our two Budgets make a very substantial contribution to the restoration of conditions in which enterprise can once again play a part in creating jobs in this country. What never ceases to astonish me is the extent to which Opposition Members appear to live in a world of their own and ignore the fact that we are not alone in the analysis which I am commending to the House.
In our clear recognition of the need to reduce public spending we are marching in line with most of the other Governments of countries with successful economies. By way of example, substantial public spending cuts are being implemented at this time in the United States, the Netherlands, Denmark, and Sweden. In Japan, Government spending is growing more slowly than at any time in the past 20 years. There are signs that public spending will have to be still further restricted in France next year. Expenditure cuts are an early priority for the new Belgian Government. It is remarkable that Opposition Members should continue to criticise the expenditure cuts that we are making when we are not the only Government doing so and when even a Labour Government were compelled, after two years of reckless expansionist spending, to undertake expenditure cuts in exactly the same way.
It is interesting that, although we are planning for the steady and substantial reduction in public spending that I have been talking about, the main anxiety that seems to come through from most critics is not that our planned spending reductions are too severe but that they may not be ambitious or effective enough.
That is the effect, in sum, of many of the questions raised by the Select Committee. It asked " What if nationalised industries cost more than you think? " That is a fair question. " What if the relative price effect is more adverse than you suggest? " " What if public sector pay continues to take too large a share of resources? " They are all questions that I well understand being asked, all leading to the conclusion that the case for a reduction in public expenditure is stronger, not weaker. I welcome that analysis and that pressure.

Mr. Tony Marlow: Will my right hon. and learned Friend sustain his point by telling the House that public expenditure this year will be more than it was last year, so the need for public expenditure cuts is even greater now than it was before?

Sir G. Howe: That is the point that my right hon. Friend and I have been making to the House from many directions. I am endeavouring to underline the stark contrast between the realism of the great majority of those who support the Government and the unreality of the Opposition. The realism of our policy is that which commends itself to most successful Governments in the rest of the world.
My hon. Friend's point touches on a matter raised by the Select Committee, which draws attention to anxiety over the scale of cuts in capital spending and asks for more substantial cuts in current spending. I claim credit for the fact that this Government are pioneering reductions in public spending in areas that have not been touched by previous Governments. We look for the full support of this House in continuing to reduce current spending in that way. Once again we are addressing ourselves to real questions.
I apologise for concentrating on my hon. Friends, but it is they who are addressing themselves to the substantial problems of this country.

Mr. Bruce Douglas-Mann: Has the Chancellor even considered the provisions of the Brandt Commission's report on North-South relations and its proposals for world economic recovery, which would involve increased contribution to overseas aid? How is that taken into account in the proposed reduction of 15 per cent. in overseas development?

Sir G. Howe: That is an interesting question, which no doubt could have been raised in the debate that the House had a few weeks ago in private Members' time on the report of the Brandt Commission. No doubt it will be raised when the House returns to debate that report on a future occasion.
Even in relation to overseas aid, however highly one may prize it, one is bound to adjust one's expenditure according to what one can afford. When one has regard to the extent to which a large proportion of public spending going through the Budget is being transferred overseas on defence expenditure, the Community budget, and aid amounting to several billions of pounds, I make no apology whatever for having curtailed our expenditure on aid to a figure that is consistent with what this country can afford. In doing that I am confident that I am doing what the majority of people in this country want
The point that I was dealing with a moment ago is put in another way, although it is not always recognised as such, by those who fear—again I refer to the Select Committee—that the growth assumptions underlying the strategy may be unduly optimistic. They imply that if that is the case, and if growth, even on the modest scale suggested, is not forthcoming, even the reduced spending programme could be unsustainable.
I remain of the view that the assumption of 1 per cent. annual growth after 1980, on which the illustrated projections in the Red Book are based, can properly be described as deliberately cautious. In passing, it is interesting to compare that figure of 1 per cent. per annum with the 5 per cent. or 6 per cent. per annum at which the Leader of the Opposition was aiming in 1964, or the 4 per cent. per annum that he regarded as inadequate in 1965. In fact, 1 per cent. was the rate of growth achieved between 1973 and 1979, a period that appears to

span a complete cycle in economic activity.
We expect the British economy, as well as the world economy, to be recovering from recession from 1981 onwards. Over the comparable period in the last cycle, from 1975 to 1979, GDP grew at over 2 per cent. a year. The economy should certainly be capable of growing faster than the 1 per cent. a year set out in the public expenditure White Paper. However—this is the important point to realise—even if GDP does not grow at the assumed 1 per cent., there is room for manoeuvre. The modest and reducing plans for public spending that we put forward are compatible even with that.
There is one aspect of spending that has attracted a good deal of interest—that which concerns the future of nationalised industries. In that respect the White Paper is no less detailed than its predecessors. Moreover, I have already explained to the Select Committee, in broad terms, where and why we expect improvements to be achieved. The aggregate financing figure in the White Paper was built upon a basis of detailed discussion between sponsoring Departments and the industries. I have suggested that if Parliament wishes to inquire into the prospects of individual industries, the best way is for the relevant specialist Committees to discuss them with the sponsoring Department. I understand that the Select Committee on transport is already doing that.
We may or may not be right in our view that the Government's policies will secure a major transformation in the aggregate financing requirements for nationalised industries over the four-year period. I hope at least that the House will agree that that transformation is highly desirable, because the nationalised industries account for about 10 per cent. of the GDP. They are an important part of the enterprise sector and no-one, surely, can doubt that they need to be efficient, competitive and profitable.
Of course, the problems of some of the nationalised industries are very deep-seated, but it would be foolish in today's world, for example, to continue to allow energy to be underpriced. Over much of the loss-making field of the nationalised


sector, as over much of the entire economy, there can be no substitute for improved performance, which is desperately needed. Indeed, it is essential if we are ever to turn more of the nationalised industries into wealth-creating instead of wealth-consuming industries.
That point serves to illustrate the most important feature of the debate—the extent to which a large part of economic performance is beyond the power of any Government to control or command. Some aspects of economic policy may be predictable, but it does not follow that they are capable of correction by Government. Some economic prospects may be understandably described, in that beguilingly convenient word, as unacceptable, but it may not be in the power of Government, and certainly not of Government by themselves, to prevent the unacceptable coming to pass. That is the proper background against which to judge the adequacy of the Government's policies for the corporate sector of the economy—perhaps, more accurately, the non-oil corporate sector.
No one doubts that there may be real difficulties ahead for those who work in that changeable part of the economy, whether in manufacturing or service industries. Even so, I hope that the House will take to heart on this issue the warning given to the Select Committee by the Governor of the Bank of England against what he called a too generalised pessimism. As he said, there is unsurprisingly, a great deal of variety, with many firms having sizeable order books for profitable business. There is also a good deal of healthy industrial adaptation going on. We should bear that in mind as we ask the question, how far are Government able to help the enterprise sector?
What are the pressures on the financial position of business? They may be listed: firms' inability to raise their prices because their competitive position in home and overseas markets rules that out; the high level of interest rates that firms have to pay on their bank borrowing; the weight of taxation—corporation tax, national insurance surcharge, and so on; pay demands beyond what can be financed through higher productivity or sustainable price increases; and, finally, declining markets that affect world re
cession or the strength of sterling.
What should the Government do about those pressures? Should we somehow reduce the exchange rate? Fundamentally, the value of sterling depends on market forces. We have removed the artificial prop to the exchange rate represented by exchange control, but we could not intervene significantly to reduce the rate without endangering monetary targets and giving a twist to the inflationary spiral. Any benefit to companies would soon be countermanded by still higher pay demands, and the consequences would further damage the prospect of economic recovery.

Mr. Michael English: The right hon. and learned Gentleman made the same statement to the Select Committee. He said that the Government could not do anything about the inflow of capital without endangering his monetary targets. The Government could do so if they chose. They could impose reverse exchange controls. I do not necessarily advocate that. I merely point out that the right hon. and learned Gentleman's statement is not strictly true.

Sir G. Howe: In the field of the practicable it is true, but one should not be prepared to accept that suggestion, which even the hon. Gentleman does not urge.
The alternative suggestion sometimes made is that we should seek to cut company taxation, but if the revenue lost by reducing company taxation were not recouped in another way it would mean either once again putting monetary targets at risk or increasing interest rates to keep the money supply under control. If we tried to increase other taxes to lighten company tax—income tax, VAT or excise duties—it would add to pressures for higher gross pay. None of the outcomes would help companies. They would all tend, directly and indirectly, to push up prices, industrial costs or interest rates.
What about the prospect of reducing interest rates? As I made clear in my Budget speech, our policies are directed towards securing lower interest rates. That is why we have acted firmly to hold back public spending and reduce public sector borrowing. However, we cannot expect to see interest rates moving down and staying down until the money supply is firmly back under control and the forces that made for rapid growth in money supply in


1979 have subsided. In practice, the money supply is coming under control and interest rates have come down a little. Figures published earlier today show that the rate of growth of sterling M3 over the past 10 months has fallen to an annual rate of about 10 per cent., and in the past six months the rate has been less than that.
These figures are encouraging, and show that our policies to reduce money supply growth are working. In recent weeks the gilt-edged market has also demonstrated its confidence that our policies will bring down the rate of inflation and, with it, interest rates. We have sold substantial volumes of gilts, and long-term interest rates have fallen. But although these figures are encouraging it would be incautious for the authorities to follow them too quickly with a reduction in MLR. The details of today's figures are not yet available. We shall not be sure of the position until it is clear that current interest rate levels are restraining the persisting excessive rate of growth of bank lending in recent months.
To reduce MLR prematurely would risk undermining our policy to bring down the rate of inflation. We might then be faced with having to increase interest rates again late in the year. That would be damaging for industry, home owners and consumers alike, and would push the prospect of resumed growth further into the future.

Mr. John Bruce-Gardyne: We were delighted by the progress that the Government made in bringing M3 back on to the path, but, against the background of a balance of payments deficit, should we not pay some attention to the domestic credit expansion statistics? Do they not contain some element that requires careful scrutiny?

Sir G. Howe: As my hon. Friend knows, we seek to pay regard to all the statistics, as I have often emphasised. However, the single indicator of sterling M3 is not the only figure that we have in mind.
I come back to the company sector in the broader sense. I recognise the difficulties particularly of those companies that are producing goods and services that face competition from overseas in

both home and export markets. They are very much in my mind today, since I spent the morning at the National Economical Development Council discussing just these problems. However, it must still be said, as it was said this morning, that in the great majority of cases by for the most effective action to help companies still rests with companies themselves, their managers and their workers.
In the short run, as they adapt to the relatively poor prospects with the world economy this year companies may be able to reduce their stocks and so reduce their interest rate costs. More fundamentally, however, they have to become more competitive, and that means keeping unit labour costs under better control. That is not something that Government can do. We certainly cannot go back to institutionalised incomes policies, the backwash of which is now presenting such huge problems for public finance.
We cannot get away from the issue of pay. If negotiators on both sides of industry will recognise the inevitable constraints set by monetary targets, which are the inescapable condition for controlling inflation, and if they will face the facts of the world's economic climate, the prospects for British companies will improve substantially. Inflation will fall more quickly and more effectively, and the foundations will have been laid for the durable reduction in interest rates that the company sector wants and needs.
We have always recognised and asserted that the struggle against inflation will take time. We have always stressed that it will involve costs in the short term. That cannot be repeated too often. The short-term costs of reducing inflation can be reduced if people recognise that a firm monetary policy will in the end mean a lower rate of inflation and adjust their behaviour accordingly.
In effect, the process of reducing inflation can be to some extent short-circuited. That is what has happened in countries such as Germany, Switzerland and Japan. People know that their Governments will not accommodate inflation, so they bargain on that basis and not on the basis of some going rate of pay settlements or of recent changes in the retail price index. For their part, the Governments will do everything within their power to seek to ensure that moderation in public


sector pay contributes to a gradual lowering of inflation.
Monetary control bites on some parts of the public sector by way of interest rates and the exchange rate—in some ways as it does on the private sector. We have also the discipline of external financing limits and cash limits, which are particularly important in the case of the public corporations, which are monopoly suppliers of certain products. No one should doubt the Government's determination to make that discipline bite.
I note the extent to which the Select Committee expressed concern about that aspect of the problem of controlling public expenditure. I hope and believe that we can count on the full support of the House in our efforts to achieve moderation in pay bargaining within the public sector.
I have tried to deal with some of the anxieties about our policy while spelling out the policy itself. It begins to appear that most of the anxieties that people have in mind in effect reinforce the case for our strategy. To the extent that it is difficult to achieve the spending and other objectives that we have set ourselves there is all the more reason to persevere resolutely with that strategy. I assure the House that we shall do just that. What we have heard so far does not invalidate our general approach. Nor, above all, does it offer an acceptable alternative means of reducing inflation without adjusting future public spending along the lines proposed in the White Paper.
We have made absolutely clear our determination to bring down the growth of the money stock so as to defeat inflation and to pursue the fiscal policies necessary to achieve that aim. That is the message of the medium-term financial strategy, and it is the objective of all our policies. Of course, the figures will vary from time to time. New decisions will have to be taken. Existing expenditure and other plans will have to be reviewed and adjusted as we move forward. However, I have no doubt about the correctness of the strategy that we have set out.
Success will come more quickly and with less pain if decision makers throughout the economy work with the grain

of that strategy. It is not, as is so often believed, Government policies that are threatening or destroying jobs. All too often that is done by unrealistic pay increases. There are now some encouraging signs of realism, but how quickly we can return to higher output and higher employment depends largely on how soon greater realism and moderation begin to prevail. In getting that message over to the British people I shall welcome the support of the House, of the Select Committee, and of all those who have the nation's best interests at heart.

Mr. Denis Healey: I beg to move, to leave out from " House " to the end of the Question and to add instead thereof:
' rejects the Government's Expenditure Plans 1980–81 to 1983–84 [Cmnd. 7841] on the grounds that they will increase unemployment, raise the cost of living, and lower the standard of the public services.'.
The Chancellor of the Exchequer was untypically guilty and defensive in his speech this afternoon. As I understood his closing remarks, basically he was saying that all that he is doing will take time. I am sure that he would be Miss Mae West's favourite Minister, because she is reputed to have said " I like a man who takes his time."
One of the oddest things about the right hon. and learned Gentleman was that he spent most of his speech attacking the forecasts that he has published. After all, we are supposed to be debating the forecasts of public expenditure over the next four years as published by him. Those forecasts are designed to be compatible with the medium-term financial plan for the next four years which he has also published.
However, now the right hon. and learned Gentleman tells us that we should not take the slightest notice of anything he says about the future because the future is so uncertain. The one thing on which I agree with the right hon. and learned Gentleman is that one should not pay the slightest attention to what he says about the future, and I shall demonstrate why that is so.
The right hon. and learned Gentleman spent almost none of his time discussing the public expenditure White Paper which is the subject of this debate. He made a speech which I daresay he hopes that


his right hon. Friend the Chief Secretary will make tomorrow. He may be right in thinking that the Chief Secretary will not make that speech. I shall deal with what he said about the Government's general economic policy—exchange rates, interest rates, and so on, in my speech tomorrow afternoon. I propose this afternoon to devote myself to the White Paper. Almost the only reference by the right hon. and learned Gentleman to that was at the beginning of his speech when he attacked the previous Government for being impulsive and unsustained. I think that those were his adjectives in respect of public expenditure.
This is the third batch of public expenditure cuts that the right hon. and learned Gentleman has presented to the House in nine months. This new White Paper on public expenditure accompanies his third set of fiscal measures over the last nine months. I confess to the right hon. and learned Gentleman that in terms of the sheer quantity of measures that he is putting before the House, he beats me to a frazzle.
A question that the right hon. and learned Gentleman did not even attempt to answer was why the Government are making this third further set of cuts in public expenditure only five months after we debated the last set. When the right hon. Lady the Prime Minister discusses this question in public, especially on television, she tends to say that public expenditure must be cut because the people of this country must be free to choose how they spend their money.
I remind the right hon. and learned Gentleman and the right hon. Lady that the people of this country were free to choose last Thursday. They chose public expenditure at the expense, if necessary, of an increase in rates. Whatever may be said about the results of the local authority elections last Thursday, the one thing they prove beyond any possibility of denial is that the people of this country are not prepared to see the standard of their public services reduced even if this means that they have to spend more money in order to keep them up to standard.
The right hon. and learned Gentleman is a little more sophisticated than the right hon. Lady. He explains in paragraph 3 of his White Paper—I do not know if he

read it before having it published—that the reason why he is producing a new set of public expenditure cuts only a few months after the last lot is that he failed to control the money supply and adopted a fiscal policy of savage deflation in the hope of getting monetary policy back within the target range. I remind the right hon. and learned Gentleman that his hon. Friend the Financial Secretary told us a year ago that the target for this year was a 9 per cent. increase in money supply. That was the target figure given in the Financial Statement and Budget Report last June. The right hon. and learned Gentleman says that even in the last 10 months, ignoring the appalling record of the first two months that he was in office, the increase was 10 per cent. That does not include at least 2 per cent. from acceptances. The right hon. and learned Gentleman is way outside his financial target even now.

Sir G. Howe: I should merely like to know whether the right hon. Gentleman, in his generous mood, is prepared to accept his personal responsibility for what he describes as the appalling monetary growth during my first few months in office. Surely, the right hon. Gentleman must at least accept responsibility for that.

Mr. Healey: Absolutely not. In the year up to May last year, when the present Government took power, monetary growth was well within the target that I set as Chancellor of the Exchequer. The right hon. and learned Gentleman published the figures in the Financial Statement and Budget Report. The increase in the money supply during the last year I was in power was 11·7 per cent. According to the Financial Statement, which the Chief Secretary to the Treasury must have read, although I am sure that the Chancellor did not read it, the increase in acceptances started last year. This is stated in terms in the Red Book, as the right hon. and learned Gentleman knows. The excuse that the right hon. and learned Gentleman presents for his monetary profligacy in his first few months does not wash according to the statements and figures that he has published in the current Financial Statement and Budget Report.
I shall deal in detail with the points that the right hon. and learned Gentle


man made about his monetary and fiscal policies and economic policies in general at the appropriate time when we debate the Second Reading of the Finance Bill tomorrow. I am glad that the right hon. and learned Gentleman has given me a little more ammunition for the speech that I shall prepare in the morning. I propose now to deal with the subject of the debate—the so-called public expenditure White Paper, "The Government's Expenditure Plans 1980–81 to 1983–84."

Mr. Peter Bottomley: For those hon. Members who cannot wait for tomorrow, will the right hon. Gentleman remind us that his view of economic management depends on demand management, monetary control and incomes policy? Will he say whether he considers all three were under control when he stopped being Chancellor of the Exchequer in May last year?

Mr. Healey: I think that fiscal policy and financial policy were under control. There was certainly a collapse in pay policy a year ago, but the increase in pay up to May last year was about 14 per cent. Immediately after the new Government took office, pay settlements rose in those last three months to an average of 16 per cent. They are now running at 20 per cent. In the public sector, for which the right hon. and learned Gentleman took direct responsibility, settlements are running at 25 per cent. It is a little thick for the right hon. and learned Gentleman and his hon. Friend the Member for Woolwich, West (Mr. Bottomley) who, I believe, takes a more balanced and moderate view, to criticise the previous Government for weakness in their pay policy which resulted essentially from a vote in the House of Commons forced by the Conservative Party in December 1978.
I now come to the question: Why should we cut public expenditure further? We should not cut it further for the reasons that the right hon. and learned Gentleman gives in his plans—that it is too high in relation to other countries or in relation to the Government's fiscal and monetary targets. Our public expenditure is already lower as a percentage of our gross domestic product than that of any other country in Europe. It is running at 42·7 per cent. against an average of 46·8 per cent., with both

Germany and France both well over 46 per cent.
There is no relationship between money supply and the percentage of public expenditure. This is a point that I have made previously to the right hon. and learned Gentleman but he has totally failed to deal with it. I hope therefore that the Minister, in winding up the debate, will try to deal with it. The best proof is the fact that even in 1975 when public expenditure was running at nearly 50 per cent. of GDP, money supply was running at 10 per cent. It ran at that the year before, and the year after. There is no relationship between the level of public expenditure and the public sector borrowing requirement. Our public sector borrowing requirement and the money supply were running at 10 per cent. of GDP in 1974–75.
There is no relationship between the level of public expenditure and the level of interest rates. The level of interest rates in 1975 was only one-half to two-thirds of what it is now running at. The right hon. and learned Gentleman's failure, as he knows, because he says so from time to time, to control the money supply is due to the high level of corporate borrowing.
Corporate borrowing is very high because companies are having to borrow heavily to finance excessive pay increases generated by the inflation rate that the right hon. and learned Gentleman created. He has not attempted to deny it. The inflation rate is 7 per cent. higher than the average in the industrial world, entirely as a result of his own fiscal and economic policies. The level of corporate borrowing is also high because companies are carrying excessive stocks at an excessive cost due to the Government's decision to raise minimum lending rate to 17 per cent., a higher level than has ever been known in this country and sustained for a longer period than ever before. That is a direct result of the Government's fiscal and monetary policies.

The Financial Secretary to the Treasury (Mr. Nigel Lawson): If the right hon. Gentleman is asserting that there is no relationship between the public sector borrowing requirement and the rate of interest and that there is no relationship between the public sector borrowing re


quirement and the rate of monetary growth, why was his first action on becoming Chancellor to seek to reduce the public sector borrowing requirement?

Mr. Healey: I thought that it was too high, not in relation to financial factors. That was not the problem at all at that time. The money supply and interest rates were low; the exchange rate was firm. I reduced the public sector borrowing requirement because I thought that it was too high in relation to other factors in the economy. I explained that. The Financial Secretary must try to understand these matters if he wishes to make progress. He has done badly in his first year. I hope that he will improve. He should read the speeches that I made at the time in which I explained why I was reducing the public sector borrowing requirement.
The recession from which Britain is now suffering is the heaviest of any country in the Western world, yet Britain is the only industrial country which benefits from increases in oil prices. Yet we are increasing public spending. Public spending on benefits goes up £100 million for every 100,000 extra people on the dole. The Chancellor of the Exchequer told us last month that an extra 300,000 would be unemployed as a result of his policies and he admitted to the Select Committee that the number would be much higher than that. The PSBR increases a great deal more than public expenditure because revenue is lost when people are out of work and living on social security instead of earning money.
The right hon. and learned Gentleman's deflationary fiscal policies are creating the very problem which he is trying to solve by using measures which can only increase the scale of the problem. The result is clear. It was pointed out by the Select Committee and it is clear in the White Paper. The net result of the agony of cuts in summer and autumn last year and in the early months of this year is that the Conservative Government spent £289 million more at constant prices in 1979–80 than the Labour Government did the previous year. In the current year, 1980–81, the Government are spending about £400 million less than they were spending last year. Given the Government's deflationary policy, the net result of all the agony

involved in public expenditure cuts is that public expenditure has been kept roughly level in the last three years at constant prices. However thanks to the deflationary policy, as a percentage of gross domestic product, public expenditure after all the cuts, will rise in the current year.
Those are the facts that are revealed in the White Paper. I know that the right hon. and learned Gentleman will not seek to deny them because he cannot. The cost of this minuscule achievement is an appalling increase in the length of the dole queues. The right hon. and learned Gentleman might wipe the grin off his face when I talk about that. The cost is also an increase in prices and falling standards in the public services. The measures in the White Paper will increase both the depths of the recession and the level of inflation which Government policies have already generated.

Mr. Tim Eggar: The right hon. Gentleman cannot have it both ways. On the one hand he decries the cuts that the Government are making and, on the other, he says that they are making no cuts. What does he want?

Mr. Healey: I hope that the hon. Gentleman will reflect on what I say. The Government are adopting a policy of gross deflation so that the recession in Britain will be worse than anywhere else in the industrial world in the coming year. Yet we are receiving benefits from North Sea oil—an increase of 5 per cent. in our gross domestic product—which no other country enjoys. Deflation in itself enormously increases public expenditure and the public sector borrowing requirement. The result is that the Government are having to cut public expenditure heavily simply to stand still. Does the Chancellor of the Exchequer really think that that is a sensible way to approach the country's problems at this time? I hope that he will reflect on that.

Mr. Nigel Forman: Mr. Nigel Forman (Carshalton) rose—

Mr. Healey: I have given way a great deal. I give way regularly during my speeches. I enjoy interruptions but not beyond limits.
We shall discuss the wider economic implications of the Government's policies tomorrow. I shall enjoy investigating some of the points which the right hon. and


learned Gentleman made this afternoon. An important point came out of the Select Committee's investigations. It is that, if the Government stick to the plans in the White Paper, if they really fill the empty shelves displayed in the White Paper, there is no chance whatever of the feeble upturn in economic activity which the Government forecast in their Financial Statement.
The right hon. and learned Gentleman told the Select Committee that manufacturing output will fall by 6 per cent. in the next four years. He said it would fall by 4½ per cent. this year and by 0·5 per cent. in each of the following three years. He said that output from the North Sea will increase by only 0·5 per cent. of GDP each year. The World outlook is gloomier with every month that passes. The increase in the output of services, which is the only other item in economic activity beyond public expenditure, cannot conceivably produce the turn-round in output forecast by the right hon. and learned Gentleman in his financial plan.
We must have higher public expenditure and a higher public sector borrowing requirement if at the end of four years we are to have any hope whatever of getting output back to the level at which the right hon. and learned Gentleman found it when he took office in May last year. The facts are displayed in detail in evidence to the Select Committee.
Even if we judge the White Paper by the standard which the right hon. and learned Gentleman set for it, it cannot survive even the most gentle scrutiny. I congratulate the Select Committee on the Treasury and Civil Service on producing such a thorough report in so short a time. I should particularly like to congratulate the right hon. Member for Taunton (Mr. du Cann)—I doubt whether I shall do so on any other occasion—on securing unanimity among Conservative, Labour and Liberal members of the Committee on findings which are severely critical of the Government's policy.

Mr. Eggar: They are not.

Mr. Healey: I have read it, my dear fellow.—[Interruption.] You, Mr. Deputy Speaker, are far more dear to me than the hon. Member who interrupted me. I read

every last thousand words of the report.
As the Select Committee report says, after five years in which the Labour Government steadily increased the amount of information available to the House, the present Government have put the process into reverse. The Chancellor talked about explanation as being his job. If hon. Members take the trouble to read the evidence which was given to the Select Committee, they will find not explanation from the Chancellor but prevarication and equivocation in answering all the questions put to him. The right hon. Member for Taunton was compelled to animadvert on the Chancellor's lack of candour in dealing with the Select Committee. I see two hon. Members from different parties nodding their heads in agreement.
The main criticism by the Select Committee cannot be denied. Indeed, the Chancellor did not attempt to deny it. There is no breakdown by category of public expenditure plans for the coming four years, so it is impossible to judge the economic effects of the cuts in particular programmes.
The Secretary of State for the Environment, when he was questioned about this by the Select Committee on the Environment, described the attempt to get more information as an exercise in academic curiosity. Yet it makes all the difference in the world whether the housing cuts are achieved by raising rents, which has an immediate effect upon the cost of living and wage settlements, or by cutting building programmes which has an immediate effect on employment.

Mr. Bruce-Gardyne: The right hon. Gentleman is making great play of the extent to which the Government of whom he was Chancellor published those detailed figures which he accuses my right hon. and learned Friend of withholding. Is it not arguable that no great purpose is served in achieving better government in regularly publishing, as the right hon. Gentleman did, detailed categoric programmes which had then to be adjusted every six months as he produced successive new Budgets to accommodate changes in events? What was the advantage in that?

Mr. Healey: Of course it is arguable. It was argued by the Chancellor to the Select Committee, but the Select Commit


tee rejected the argument—that is the important point. A great deal more information was provided in previous White Papers, in particular the breakdown by economic categories and the breakdown between capital and public spending which I shall come to in a moment. That information is vitally important if one is to judge the wisdom of the Government's plans and that information has been denied to the House of Commons by the present Chancellor. It was given to the House by myself and by previous Conservative Chancellors.
I give an example. There are additional cuts in the White Paper this year which fall almost entirely on housing. Indeed, those cuts were announced to the House long before the White Paper was published. But to take future years—the following three years—we are presented, as my hon. Friend said, with a series of empty boxes. We have not the slightest idea how these cuts in housing expenditure will be achieved. The right hon. and learned Gentleman had to admit that no decisions have yet been taken. These are just pious hopes from the point of view of the Government. From our point of view, they are pious fears.
In answer to the hon. Member for Knutsford (Mr. Eruce-Gardyne) I say that decisions on capital spending must be taken years in advance if the profile of Government spending as a whole is not to have bulges in particular years which will throw the whole of economic management out of kilter. The hon. Gentleman knows that perfectly well. That is a reason why Lord Plowden—Sir Edwin Plowden as he then was—persuaded the Government 30 years ago to adopt a five-year volume plan for public spending. All that is lost in the present White Paper.
The shortfall figures in the White Paper are unrealistic. It is quite clear to anyone who has worked in the Treasury, as I have, that they have simply been treated as residual to ensure that the total for each year comes out all right from the point of view of the Government. The assumption on the growth of costs in the public sector is also unrealistic and the assumptions in the White Paper are contradicted by the Financial Statement and Budget Report published on the same day. The FSBR assumes

that public sector prices rise by 7 per cent. more than the increase in the RPI whereas the White Paper assumes that they rise by only 0·7 per cent. more.
The right hon. and learned Gentleman, when he was faced with this contradiction by the Select Committee, could only answer to the effect that the FSBR was produced at a different time from the White Paper although they were, in fact, published at the same time. The difference between the relative price effect in one and the other is a difference of 10–1.
The whole of the White Paper is in " funny money " as critics of the last Government used to call it; that is, in constant prices. But those figures are contradicted by table 20 in the FSBR where the figures are given in money terms and are irreconcilable with the figures in the White Paper. I hope that when the right hon. and learned Gentleman replies he will deal with that side of the problem because it was not dealt with by the Select Committee.
This so-called White Paper is a sort of house of mirrors in the funfair. There is nothing substantial in the White Paper whatever beyond the figures for the coming year. It is quite impossible to make any judgment on the figures. That was the view of the Select Committee—made up of Labour, Conservative and Liberal Members—from the facts given to it. Either the White Paper was designed simply to bamboozle this House or it reflected confusion and indecision among the Government themselves. I suspect that it reflects a little bit of each.
This White Paper took twice as long to produce as any earlier White Paper in British history. To produce a White Paper three months late which lacks the vital information given earlier in White Papers; which is inconsistent with the FSBR published on the same day, and which is also lacking in any detail in the most important areas, is an insult to this House and to the country which the House serves.
What emerges from the questions put to the Chancellor by the Select Committee is that the cuts are achieved mainly by different ways of financing existing activities in the public sector—by financing these activities not through income tax but by levies on the sick, the unemployed and the disabled. The cuts


also result in increases in local authority rates which are in turn at the expense of business. A great deal of the White Paper is not so much about cuts in spending as about increases in what most of us would call taxation.
In so far as there are real cuts in spending in the White Paper, they disproportionately fall on capital spending which will reduce the future efficiency of the public sector in the long run and the cost of which, in the short run, will be carried mainly by private industry, particularly the construction industry.
I wonder how many Conservative Members recall the policy document published in 1977 by the Conservatives and called "The Right Approach to the Economy ". Talking of public expenditure under a future Tory Government the document said:
 The necessary economies can be so phased as to give the most benefit to the nation's productive capacity. This will be in contrast with Labour's recent panic cuts, which fell too heavily on capital rather than current spending and did great damage to the construction industry.
Let us judge those promises on which right hon. and hon. Gentlemen fought the last election alongside the facts in the White Paper. This year capital expenditure falls from 13 per cent. in 1978–79 of total public spending under the previous Labour Government to 11 per cent. only in 1980–81. The cut in public investment—excluding the nationalised industries—is 15 per cent. on the level in 1978–79. The impact will be felt overwhelmingly in the construction industry.
I come now to some of the details. We have debated the cuts in social security benefits at length in recent weeks. Therefore, I will not go over that in any detail. I say one thing only. Of all the squalid and underhand devices dreamed up by any Conservative Government in the past to cheat the needy, the worst is the decision to increase pensions and other benefits two weeks later this year so as to make pensioners pay for their own Christmas bonus. I cannot understand how Conservative Back-Bench Members—I can understand the motives of Ministers—can really support a dirty device of this nature.
I wish to concentrate on the cuts in specific programmes and look at them one by one. First, the specific cuts

planned in programmes are bad enough. There is a 7 per cent. cut in social services this year on top of a 3 per cent. cut last year. There is a 4½ per cent. cut in education this year on top of a 3 per cent. cut last year. Housing allocations have been cut by 25 per cent. this year on top of an 11 per cent. cut last year.
How can the Chancellor of the Exchequer suggest that the central Government have nothing to do with housing expenditure? Does he know anything about the system of housing allocation and how local government financing works?
But that is only part of the picture, because the Government are using cash limits which are unrealistic in relation to the rate of inflation, which they themselves have created, and increases in public sector pay which they themselves have agreed, in order to cut public expenditure still further. For example, with regard to education, local authorities have been given a cash limit of 13 per cent., which means that they will have to levy a supplementary rate this autumn to raise about £1,500 million unless they can keep the next normal pay increase of teachers down to 7 per cent. On top of that, the local authorities will have to find an extra £30 million because the House of Lords rightly threw out the Government's scandalous proposal to limit free school bussing.
This year, according to the housing industry, fewer houses will be built than for more than 50 years—in fact, since the 1920s. In order to achieve the cuts envisaged by the White Paper in future years, as the Select Committee discovered, either there will be no house building at all in the public sector over the following three years or there will be an astronomical increase in council rents. Of course, to the extent that there is a further collapse in council house building, that will mean further unemployment and bankruptcies in the construction industry.
The social effects will be catastrophic, I readily admit not across the country as a whole, but in certain areas. Only this morning, the director of Shelter pointed out in a letter to The Times that in London housing waiting lists have grown by more than 100,000 over the last 18 months, so that 210,000 families are now


waiting for a home in London, and more than 1 million people are waiting in England and Wales as a whole.
The cut of £100 million in the road programmes will mean at least 10,000 construction workers out of a job in road construction and maintenance alone. The savage cuts in social services are bound to increase delinquency to such a degree that the extra police under the law and order provisions in public expenditure will be totally incapable of coping, and they will force old people who would have been housed more happily and much more cheaply in old people's homes into desperately scarce hospital beds instead.
The worst effect of the new cash limits will be felt by the nationalised industries. The only good thing that I can say about the White Paper in relation to the nationalised industries is that the Government are now relying so much on public revenue from BNOC that they have been compelled to give up their idea of selling off BNOC to the private sector.. But in other parts of the nationalised industries, the Government's cash limits have already led to the resignation of one of the ablest chairman of the nationalised industries—Sir William Barlow—who asked in vain for an increase of £150 million, or 10 per cent., in order to produce telecommunications equipment which he could sell at a profit once it was there. It will mean higher charges throughout the nationalised industries on top of the real increase of 10 per cent. a year in gas prices envisaged in the White Paper—that is, 10 per cent. above the increase in the retail price index each year for the next four years—big increases in the real price of electricity as well, or heavy cuts in capital investment, which is vital to the country's industrial infrastructure.
Indeed, as the Select Committee pointed out, the net reduction of £2·7 billion in public spending, to be achieved by the nationalised industries over the next four years, cannot be achieved either without a terrifying increase in the prices they charge in all areas, not just in electricity and gas, or further cuts in essential investment or cuts in vital activities. I am glad to see that now even the Financial Times has recognised the need for more investment in the finishing end of the: steel industry if we are to have an in

dustry in the coming years which is worth keeping at all.
The only way in which the Government can achieve their target is by abolishing existing subsidies to coal and rail, because they have said that they will find the savings in nationalised industries, outside gas and electricity, by compelling the other industries to eliminate their present deficits. However, the total scale of present deficits in the other industries is only £500 million, whereas the Government are asking them to find a saving of more than £1,000 million in the coming four years. Does it really make sense to abolish subsidies for railways and coal, which are already far lower than the subsidies paid by other countries? Germany's subsidies for its railway system and coal industry far exceed the subsidies in Britain. Of course, those are subsidies to all the industries which use railway and coal. It is madness to allow this disparity in subsidies for vital infrastructure industries not only to continue but also to increase at a time when the excessive strength of the pound is already crippling the competitiveness of British industry.
I believe that the chairmen of the nationalised industries are quite right to argue, as they have argued in recent months, that we shall have to change the whole basis of nationalised industry financing. There are 18 such industries, which together employ 7 per cent. of our country's work force and produce 10 per cent. of the output. There are great opportunities for profitable investment in many areas for all of those industries. For example, as Sir Peter Parker recently pointed out, British Rail is now carrying more people more miles than it was in 1961 when it had 30 per cent. more track. If it had the opportunity to pursue its current plans for electifi-cation and a single track Channel tunnel, that would be certain to pay a handsome profit, but it is forbidden to do so because of the cash limits which the Government have imposed on its borrowing. Why cannot those industries, which have prospects of profitable investment, go to the markets for their borrowing, just as BNOC has done over many years?—[Interruption.]—Perhaps the Financial Secretary will answer that question. We did allow BNOC to go to the market I think that we should have gone further,


but I want to know why the Chancellor now thinks that we should not go further.
Let me give some other examples. Over the weekend—and this may cause some unjustified pleasure to some of my hon. Friends—London Transport revealed that it may have to withdraw buses entirely from some of the Tory suburbs, such as Bromley and Harrow, in the coming year because it cannot afford to continue running those services with its present cash limits. Of course, the one good result is that it makes it more certain than ever that London will join all our other great industrial cities in voting Labour when it has the chance to do so in 12 months' time.

Mr. Robin F. Cook: Is my right hon. Friend aware that when the Select Committee on Transport investigated the external financial limits proposed for British Rail, it found that over the period of the White Paper they are not merely to be reduced to zero but at the end of the period there will be an actual net repayment of £5 million to the Government? Is it reasonable that British Rail users should have to pay increased fares in order to make a net repayment to the Government?

Mr. Healey: I agree with the thrust of my hon. Friend's remarks. I shall deal with that aspect shortly. The plain fact is that the Government are forcing nationalised industries to make unnecessary profits, by charging private industry more than they should. The Government are supposed to be in favour of private industry, but that is an odd way of going about things.
British Gas now wants a share in the North Sea pipeline. I gather that that will cost £1½ billion. That is not in the White Paper. Where will that money come from? British Gas will not be allowed to participate in that project—I understand that the Secretary of State for Energy is rightly taking a different view from the Chancellor—for a reason based on pure statistical accounting convention, namely, that it would count as public expenditure.
The water authority is losing about 25 per cent. of its water in leaks. However, it will experience a savage cut in the amount of capital expenditure avail

able to deal with that type of problem. The Government have given nationalised industries flexibility in only one area. The Secretary of State for Industry has just given a £2 million bribe to an American bank. The bribe appears to involve the public financing of tax avoidance. Mr. MacGregor will reap the benefit of that money on retirement, in his capacity as a board member of Lazard Freres. There has been a lot of talk about that. I hope that there will be more talk about it in coming weeks. It has been said that that £2 million represents a transfer payment. It is a very odd form of transfer fee. Mr. MacGregor has no experience of steel, nor of any major manufacturing industry. The Government might just as well have told Leeds United to pay the Brooklyn Dodgers, in order to get an elderly baseball star as its manager.
I can never decide whether the Secretary of State for Industry is Rasputin disguised as Tommy Cooper, or Tommy Cooper disguised as Rasputin. He should take his responsibility towards making British industry more competitive more seriously. All other Governments are using Government money in order to achieve that objective. With the agreement of the Secretary of State for Industry, the Chancellor of the Exchequer has decided to halve the industry budget for the next three years. As I said to my hon. Friend the Member for Edinburgh, Central (Mr. Cook), nationalised industries are being forced to make excessive profits out of private industry, as a result of unnecessary price increases. Hundreds of thousands more jobs will be lost to private industry. In addition, hundreds of thousands of jobs will be lost as a direct result of the Government's deflationary policies.
The other day I heard that Talbot, the old Chrysler company, had increased its productivity by 25 per cent. in the past three months. The Peugeot Citroen ownership of Chrysler may have to put any new investment into other countries. They offer much better investment incentives. In recent years, Japan has invested £500 million in the micro-processing industry. However, the Government are still arguing about whether to give the second half of £50 million to our microprocessing industry. Our competitors are subsidising interest rates for industrial


investment. It has been calculated that the cash flow cost of borrowing for investment by Japanese companies is only one-tenth of the cost incurred by British companies.
We all know that German banks arrange finance for their industries. The French Government do not conceal the fact that French banks give interest subsidies to firms which can show that increased investment will increase their activity and employment prospects. We have an unparalleled and unique opportunity that no other Government enjoy. We have oil revenues. The Chancellor of the Exchequer told us that those revenues will amount to £4,000 million. However, every penny is being spent to finance not investment, but unemployment and recession.
The other day, the Minister of Agriculture, Fisheries and Food had the courage to point out that Britain will lose its various battles for world trade, unless it puts that money into industry. The director-general of NEDO made the same point in a paper which I gather was discussed at the NEDC meeting this morning. We have had no sign that the Prime Minister or the Chancellor of the Exchequer is listening.
The nearest thing to a " U-turn " occurred on Sunday. The Prime Minister gave a long interview. [hon. members: " Too long! "] Indeed, I have a feeling that she was fulfilling her own description of a tedious and loquacious companion on every stage of life's journey. No doubt some of her Front Bench colleagues feel the same. She suggested that money should be spent on a massive propaganda campaign, using big transmitters. She made that suggestion only a month or two after she had decided to cut the amount of money given to the BBC's external services. When she was compelled by her Back Benchers to change her mind, she decided to cut the programme for making those transmissions audible. I do not know whether the Chancellor of the Exchequer has taken account of the implications of that " U-turn ".
The White Paper is not a serious economic document. It is another exercise in fetishism by a Government who have no feeling for the real world in which real men and women live and work. The

cuts are unnecessary and damaging. They will lead to a massive increase in prices, and in the cost of living. Above all, they will lead to increases in rent, rates, heating and lighting. Hundreds of thousands will be thrown out of useful work, particularly in the construction industry. Indeed, the Government promised to protect that industry. There will be a steady decline in the standard of public services. In particular, education and the social services will suffer. Like the proposals in the White Paper on public expenditure—debated only five months ago—the cost of these proposals will fall disproportionately on those least able to bear them. For all those reasons, I ask hon. Members to support the amendment.

Mr. Edward du Cann: Following, as I am, the former Chancellor of the Exchequer, the right hon. Member for Leeds, East (Mr. Healey), I shall address my remarks primarily to the White Paper. I think that I speak for all Conservative Members, and perhaps for the House, when I say that I was amazed when the right hon. Gentleman, who began his speech with a modesty that was as engaging as it was typical, denied himself the title of the most productive Chancellor of the Exchequer. It will be a long time before the nation forgets or forgives his unparallel record of productivity in issuing Budgets.
I am more than grateful to the right hon. Member for Leeds, East for the kind and personal remarks that he made about the report of the Select Committee. I know that those remarks were well meant and that they will be much appreciated. I speak for the other members of that Select Committee when I acknowledge his kindness.

Mr. Healey: I thank the right hon. Gentleman for those words. I forgive him his sop to Cerberus.

Mr. du Cann: I do not know whether the House agrees with the title that the right hon. Member for Leeds, East gave to this White Paper. I do not know whether the White Paper is fetishist or. as the right hon. Gentleman pronounced it, " feetishist ". It is a radical document. It is intended to reduce the volume of public expenditure over four years. In 1983–84 the expenditure should be 4 per cent. lower than in 1979–80. It should be


11 ½ per cent. lower than the figure in the plans published in the last year of the right hon. Gentleman's period of office. There will be a fall of no less than £9 billion at 1979 survey prices. That is not just a contrast, but a sea change.
The White Paper—a minute spent looking at it will be valuable—describes it as modestly as did the Chancellor: as a " change of direction ". In paragraph 2 it states:
The change of direction is central to the achievement of the objectives set out in the earlier short White Paper... These are: to bring down the rate of inflation and interest rates "—
which incidentally have now endured for six months; six months too long perhaps—
 by curtailing the growth of the money supply and controlling Government borrowing; to restore incentives; and to plan for spending which is compatible both with the objectives for taxation and borrowing and with a realistic assessment of the prospects for economic growth.
I want to address myself particularly to those objectives. I speak as a strong supporter of my right hon. and learned Friend's medium-term economic strategy. I agree totally with those objectives, so clearly defined as they are. I congratulate my right hon. and learned Friend on the simultaneous publication of all elements of his economic policy, about which he was talking earlier. In particular, I congratulate him on the publication of that strategy. It is a bold thing to do. It was the wry comment of the late Sir Winston Churchill that statesmanship involved a vision of the future and subsequently an ability to explain why it did not occur. I am sure that my right hon. and learned Friend will not be in that position. He well knows that if there is anything that any of us on the Government Benches can do to help him to achieve those objectives, it will be done.
I am grateful to my right hon. and learned Friend for what he said about the work of the Select Committee. If he will work with the grain—a phrase that he used—I am sure that he will find that the Select Committee and the work that it does will be allies of the Chancellor of the Exchequer.
We are engaged on a new parliamentary process, and it may be difficult to live with, not least because the Select Committee is so well advised by distin

guished people who give their services virtually free. I pay tribute to them for that.
The comparative economic decline of our nation throughout the whole of my adult life is a shocking indictment of the policies followed in past years. The present levels of unemployment and inflation—the most obvious barometers of success or failure—are wholly unacceptable. Indeed, they are intolerable. I have no doubt that the whole House agrees about that.
It is right to be ambitious, to change these things, to be impatient to succeed. But, as my right hon. and learned Friend said, and as the former Chancellor the right hon. Member for Leeds, East so rightly commented, the international climate for success was never worse. There is the competition from the new Japans, the uncertainties that flow from our membership of the EEC—for we are no longer anything like masters in our own house—the unsettled world conditions, not least the problems over energy, the fact that the United States economy has started a major downturn, and the implications for world trade and our position are ominous. The moral is that this is all the more reason for the United Kingdom to be determined to have its own house in order.
How shall we change the plans into confident reality? I believe that the House has two duties at this time. The first is to examine carefully the assumptions on which the plans are based and to check them to the best of our ability. That is what the Treasury and Civil Service Select Committee has endeavoured to do, and it has reported to the House. A measure of our work was the frequency of the references to the Select Committee by both Front Bench speakers.
I do not wish to reiterate seriatim the conclusions in the report. It is there to be read. However, perhaps I could make some general observations. Let me start with the good news. I believe, as I think the whole Committee does, that the Chancellor's targets are probably obtainable because his assumptions about oil revenues are very conservative indeed. All private estimates are higher. However, it would be as foolish to rely upon this for success as it would be for an unemployed man with minimum income and maximum expenditure to rely upon a pools win to see him through.
As to the remainder of our conclusions, the Committee recorded its several reservations. In aggregate, the list is formidable. It is so formidable as to suggest that the whole strategy may be at risk unless there are variations in policy. I state that plainly in the hope that, by bringing out these matters more publicly, there will be a better chance of achieving success in realising the objectives of the strategy.
Perhaps I might consider three matters, all of which have been referred to in the Front Bench speeches. First, the projection of 1 per cent. real growth after this year—" cautiously conservative " as it is described in the White Paper—is, I am sure, too optimistic. I hope that I am wrong, but I do not believe that I am, and I do not believe that the Committee was wrong. Equally, unemployment, assumed to be 1·8 million maximum over the next four years, is certainly underestimated, as the Chancellor has now agreed.
It seems certain that manufacturing output, as far as any of us can predict the future, will fall by at least 6 per cent.—a compounded figure—by 1983. I think that the figure will probably be higher than that. It may be considerably higher. I find that shrinkage utterly unacceptable.
The private sector is already substantial. The implications of present policies for the companies sector are disturbing. We know what they are; they have been discussed. Interest rates, the high exchange rate, the increase in local rates and the taxation that comes with the national insurance scheme in conjunction with that will be lethal to some companies.
I do not know what is the experience of right hon. and hon. Members on both sides of the House, but I find it frightening, as I go around industry, that we seem to be losing the race. This country's industrial decline is not being arrested or reversed; it is continuing. In all seriousness, I say to my right hon. and learned Friend that deflation must not be pushed too far, in case it does incalculable harm.
Secondly, we in the Committee saw no information to indicate that the forecast turn round in the public sector was

achievable. The nationalised industries' net financial requirement in 1979–80 is £2·3 billion. That is to be transformed into a £400 million net repayment in 1983. Without this huge reversal of current form—a £2·7 billion turnround, which even the elimination of all the losses on coal, steel, shipbuilding and rail will not achieve—the Government's public expenditure reduction plans cannot succeed. The Financial Times made an apt comment:
 without further information the figures do not appear credible.
What worries me is that in our discussions in the Committee about these matters we were left with the impression that the Government were flying blind—that there were no specific plans to this end.
Thirdly, and lastly under this head, I believe that as serious a matter as any is the Government's record. This is nothing new. It is a continuation of the unsatisfactory record of previous Governments over many years. Whatever the reasons for it, the 25 per cent. increase in pay of central Government employees has worrying implications for the cash limits system of financial controls. Not only that—it is a pace setter in the economy.
My right hon. and learned Friend is right to say that the Government cannot control everything. Nor should they attempt to do so. Again, he was right when he said that perhaps there is a new mood of realism in our nation in that people are understanding better the realities of our economic situation. That is all the more reason why the Government should set an example of good management in their own house.
More serious still is the continuing emphasis that is being given to cutting capital rather than current expenditure. I do not understand—this is not the first time that I have made the remark, and I hope that I do not bore my lion. Friends—why we always cut the muscle and so rarely cut the fat.
In that regard, the Committee received extremely worrying evidence. A statistic or two will illustrate my point. Capital expenditure will fall in 1980–81, as a proportion of total programmed spending, from 13 per cent. last year to 11 per cent. It was twice that six or seven years ago.


Between 1972 and 1978 public sector capital investment fell by nearly 20 per cent. The result of all this neglect over many years is that large parts of the nation's vital capital structure are ageing, deteriorating, not being built or not being modernised. The longer the work is delayed, the more expensive it will be to undertake.
I confess to a great sense of disappointment and bewilderment that the machinery of government and the surveillance of Parliament should apparently be so impotent to arrest and correct this failure of administration. Our national life, especially the process of government, is still characterised by too many talkers, too many administrators, too much complexity, too few doers and too little that is practical. An outstanding example is the way in which we have allowed transfer payments to be the growth industry in recent years. It is as complex as it is wasteful.
On 6 December 1979 L'Expansion, a French economic and business magazine, published a comparison of the numbers employed in the public service in the various EEC countries. The definition that is used is that of the EEC Commission. I do not know whether that is right or wrong, but I guess that it is probably not so far wrong. The magazine said that the definition covered everyone paid by the State except the Armed Services and those who, such as postmen, sell their services to the public.
The comparison illustrates the situation and the trend. There are 16·6 million employed in the public service in the EEC as a whole. It appears that 21 per cent. of the total British work force are public servants. That is the highest percentage of any country in the EEC. We have 48 per cent. more public servants than Germany, 68 per cent. more than France and 100 per cent more than Italy.
Our gross national product has grown more slowly over the past 20 years than that of any other EEC member State. However, our public service has, until recently, grown faster than any of theirs. It has doubled in my time in the House, namely, since 1956. According to the figures, Britain's proportionate expendi-public expenditure on paying public ser-ture on public investment is the lowest of any country in the EEC, while our vants is the highest. Note that, Mr.

Deputy Speaker, if you will. To my mind it explains exactly what the Government must rectify. We have a habit of investing too little and paying overselves too much.
I know how difficult it is to make comparisons that are fair. If the figures that I have quoted are wrong, let us have the right ones. Even if they are only partly true, they seem to represent a shocking indictment of our failure in the House, because we are responsible for managing our affairs competently. The figures bear out a public feeling that is widespread. It appears that the Government, who should set an example to the nation of effective and economical administration, have a record that does not bear comparison with that of our competitors.
I put one question to my right hon. Friend the Chief Secretary, who is to reply to the debate. I hope that it will be answered at the end of the debate or some time soon. Is it thought by the Government that the Civil Service Department has enough weight to persuade or to require Departments to undertake the necessary reforms to cut down unnecessary manpower and to promote productivity and value for money in administration? What investigation are we undertaking? What action are we taking?
This morning I heard the Prime Minister say during a radio broadcast that if she had a regret it was that public expenditure had not been subject to greater cuts at the beginning of this Administration. I am not sure that I altogether share that opinion, but there is good sense and wisdom in it. However, are we not too preoccupied with the figures in the White Paper and in other documents? Should not we have new forms of audit that are related not only to money but to such matters as management efficiency, progress towards objectives, systems, methods, measures of achievement and performance indicators? Are we getting value for money for the huge sums that are so casually tossed around in debate and in White Papers such as the one that is now under examination?
If the first duty of the House in the context of the White Paper is to examine carefully the assumptions on which policies are based, the second is continuously to review those policies. That the Select Committee will undoubtedly


wish to do and, having done so, to report further to the House. It will do so in no carping sense, but in an endeavour, by persistence and application, to ensure that Parliament is better informed, that weaknesses in policy are exposed in good time so that they may be rectified and that successes, when they occur, may be exploited.
There is so much to do. Indeed, there is too much to do. However, I hope that the House will feel that the Select Committee has made a reasonable beginning to our constructive and heavy task.

Mr. David Crouch: On a point of order, Mr. Deputy Speaker. The purpose of the debate is to take note of the White Paper on expenditure or to amend it and so to reject it. In italics on the Order Paper there is a reference to the report of the Select Committee on the Treasury, and we have heard a notable speech from my right hon. Friend the Member for Taunton (Mr. du Cann), who is chairman of that committee.
I believe that the debate sets a precedent for the pattern of the House now that it has 14 new Select Committees. It could be that this afternoon we shall have a debate on the report of the Select Committee rather than on the White Paper. It may be that we shall listen to members of the Select Committee more than we listen to other Back Benchers. That would not be a disadvantage in terms of the contribution to the debate, but I suggest to you, Mr. Deputy Speaker, as you have the responsibility of balancing the debate, that it will be detrimental to future debates in the House if we allow them to become Select Committee debates on reports, however valuable they are, rather than debates of the whole House.
It may be that you will care to reflect on that point, Mr. Deputy Speaker, because I think that this is the first occasion on which we have had a major debate when there has been a major report from one of the new Select Committees.

Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I have no doubt that the observations of the hon. Member for Canterbury (Mr. Crouch) will be noted. We are debating public expenditure, and anything relating to public expenditure would, therefore, appear to be in order.

Mr. Robert Sheldon: The right hon. Member for Taunton (Mr. du Cann) referred to some of the important issues to be considered by the Select Committee. It is a great pleasure for me to take up the right hon. Gentleman's remarks. He has been a dedicated chairman of the Select Committee. He has won the admiration of us all in that committee by the way in which he has chaired it. It has been a pleasure for me, too, as I have tended to accompany him in a number of his journeys through various Committees of the House—for example the Public Accounts Committee, the Expenditure Committee and now the Select Committee on the Treasury and the Civil Service.
The hon. Member for Canterbury (Mr. Crouch) raised a serious point of order. He has raised an issue that must worry the House as it comes to examine matters that are dealt with by a Select Committee. I have always regarded the task of the Select Committee as being to help the House of Commons examine issues brought before the House and to be able to give some information which is of use to ordinary Members of the House, not members of the Select Committee concerned, so that the advantage in the debate will be made clear. If it does not do that, I would be particularly disappointed. Therefore, I hope that the hon. Gentleman will not consider this to be a normal way of proceeding, because we have had so little time to study the Select Committee's report before the debate. It would certainly be the intention to have that much more time and that much more understanding of the issues raised, so that the debate could be better informed about the arguments of Members of the House and those of the Government.
The Committee has been working very well. The questioning of witnesses by II Members obviously presents some difficulty, particularly in the ability to follow a clear and persistent line of questioning; and diversions are possible in that regard. However, due to the assiduous attendance of members of the Committee—it is always a 100 per cent. attendance, with members meeting to exchange views some time before the actual meeting starts—they understand one another's line of questioning. We have been able to make it rather more effective than it might


otherwise have been thought. I hope that we shall improve on that.
I was particularly sorry about the Chancellor's opening remarks when he spoke of the difficulties of providing information to the Select Committee. I refer to the statement made by the Leader of the House on 25 June 1979:
The objective of the new Committee structure will be to strengthen the accountability of Ministers to the House for the discharge of their responsibilities. Each Committee will be able to examine the whole range of activity for which its Minister or Ministers have direct responsibility. The Government will make available to Select Committees as much information as possible.
He went on further to assure the House that departmental Ministers would make
 every effort to ensure that the fullest possible information is made available to them.
Last of all, he gave this pledge:
 I give the House the pledge on the part of the Government that every Minister from the most senior Cabinet Minister to the most junior Under-Secretary will do all in his or her power to co-operate with the new system of Committees and to make it a success. I believe that declaration of intent to be a better guarantee than formal provisions laid down in Standing Orders."—[Official Report, 25 June 1979; Vol. 968, cc. 44–46.]
That was said because of the criticism that was being made that there would be some concealment of information that could readily be given to the Select Committee
The point about all this is that information from the Treasury is not sought because we are looking for information per se. We are not looking to find out what the assessment of the future might be. Members of the Treasury and Civil Service Committee are not supplicants trying to get an understanding of the future. We have a quality of advice that is second to none. Some of it will be highly regarded by the Treasury, which may wish that it had some of that quality of advice available within that Department.
The reason why we need this information and to know its essential nature, is to know whether the Government are making the right decisions based upon the information available to them. We can make our own forecasts, every one of us, as a result of the information that is made available to Members of the House by the work of the Select Committee. We can all come to our own conelusions

about what the future will bring. What we do not have, unless we get the information from the Treasury, is a knowledge of how the Treasury is basing its judgments. We have a very large number of expert bodies providing us with vast ranges of expertise and information. We are able to select from those which we think to be the best My experience of the Treasury leads me to believe that its advice is in the upper range of quality. It is not unique in this respect. What is needed, however, is knowledge of the basis on which the Chancellor makes his judgment.
The types of secrecy that the Government have made plain have been numerous in the past. They have claimed in the past secrecy for secrecy's sake, because there are great advantages to the Minister at the Dispatch Box in not having the basis of his information revealed to the rest of the House. Secrecy is very much like a wall around a castle. It protects weak Ministers, and the braver or more able Ministers ought to be able to dispense with it. To some extent it is a test of the Minister's ability. That kind of secrecy should not be required.
However, there are other forms of secrecy which have a greater claim to our attention. Some matters are market sensitive, and some matters involve commercial confidence. We must accept that these are matters about which we have to tread carefully. I am sure that the Select Committee will make no claim for information of that kind.
But then there are the questions of secrecy concerning those matters which, if revealed, are held by some to be self-fulfilling—matters such as retail prices, on which, if the Government's indication of what they felt would be the level of prices in future were known, pay claims would follow.
As I have mentioned before, however, the Treasury is not alone in the forecasting business. Today we have the National Institute, the London Business School and many, many others. The number of such bodies is large and is increasing, and the trade unions' wage claims will be dependent not upon Treasury forecasts by themselves but on the general atmosphere that is created by the others who are in the business of examining the future and trying to make some sort of assessment.
It is the general view of Chancellors of the Exchequer as they come to the Dispatch Box to scorn forecasts—their own included—or assumptions, expectations, predictions—call them whatever they like. The Government deride these but pay close attention to them. After all, what is the Budget judgment? It is an assessment of what is going to happen and how the Government should react. They must take into account the likely consequences of the action they take, and they have to make the best kind of estimate they can as to the future. It has something of the character of opinion polls. We as politicians always deride those polls—but, my goodness, we certainly examine them most closely.
The Government must take account of these matters. If the Chancellor believed that as a result of his measures the inflation rate would be 20 per cent., as a result of forecasts that are laid before him, he would hardly behave in the same way as if those forecasts were for 10 per cent. If unemployment figures were put before him that suggested that there would be 3 million unemployed as a result of the measures that he has taken, he would hardly continue on the same path as if they were for 2 million.
As politicians we are well used to weighing up these matters and examining the trade-off between unpleasant choices. That is precisely what the Chancellor does. What is needed is the ability to look at the way in which he regards these figures and to see whether his figures, the figures on which he very largely bases his future policy, are consistent with the information that is laid before him.
I agree that forecasts must, obviously, be used with great care. There must be doubt and scepticism. I regard these forecasts as signposts, not as milestones. They show the direction and the broad movement. They do not provide the precise quantities. It is judgment that makes up the difference between slavishly following—which no Chancellor could conceivably do—those indicators put before him, and the conclusions to which he comes.
The Chancellor and the right hon. Member for Taunton rightly pointed out the enormous change that the Government predict as a result of this White Paper—the change arising from public expenditure declining from £75,100

million in 1979–80 to £71,000 million in 1983–84. Over the four-year period it will be reduced by £3,700 million. Of that £3,700 million reduction, £2,500 million will come from the nationalised industries. Frankly, that stretches belief very considerably. I note that the Chancellor, when he came to the Select Committee, tried a very rudimentary breakdown. He estimated that 40 per cent. of it was due to increasing productivity and reducing the losses of nationalised industries. I hope that that is so. I should be delighted if it is so. Over £1 billion will come from that—£600 million from gas and electricity and £900 million from other sources.
That £½ billion will create these wonderous new advantages in the nationalised industries. I think that the Select Committee got it exactly right when in paragraph 17 of its report is said:
 The improvement in nationalised industries' finances assumed in the White Paper is approximately £2½billion... This seems an optimistic assumption.
I think that we shall be seen to be right there, and if we are not I shall be more than delighted. But before I am convinced that the Government will get this kind of money I want to know something about the productivity deals, the savings, and improvements in working practices which must underlie this optimistic forecast.
Generally speaking, no one can doubt that the way to determine policy is to decide the way in which it should go and then seek to discover the means by which to get there. The trouble is that by leaving out of account so much of the means, one also leaves out of account those means that might be quite unacceptable—methods such as the halving of subsidies. The reduction of £½ billion means either ending capital expenditure on housing or eliminating subsidies and doubling council house rents, which in turn, means an enormous increase in inflation. The Government might find that when they try to do this the climate of the time and the levels of inflation on which they set such store will be damaged, in the same way as they were damaged by the increase in VAT.
The other aspect of this, which was raised by the right hon. Member for Taunton, is the downturn in manufacturing output. This is one of the saddest


aspects of this Government's policies. Manufacturing output is expected to decline by 4½ per cent. in the current year and then by another ½ per cent. for each of the next 3 years. Frankly our advisers do not believe that even that states the full position. They believe that it will be even worse. This decline in manufacturing output, together with the increases in unemployent, the problem of the high pound, and the trade unions finding themselves unable to reach any agreement on Government policies, will prove to be a very difficult period for the Government.
Today we have had a survey by the mechanical engineering short-term trends working party. It suggests that output in the industry is likely to be 10 to 20 per cent. lower next year than in 1979. The Guardian comments that in present circumstances this makes
 the Finniston report largely redundant ".
Faced with all this gloomy news—and the Secretary of State for Industry is the first to admit that it is gloomy—there is not much hope for the immediate future. But according to the White Paper this will be the launching pad for an improvement. Where will this improvement come from after all the suffering? I have always felt that beneath the concerned look of every Chancellor of the Exchequer that I have ever known, from Harold Macmillan onwards, there lies an incurable optimism. He looks at the economic indicators before him, searches for the best of them and adds a little for luck. This is the only way in which a Chancellor of the Exchequer in modern times can preserve his sanity. I suppose it is the Chancellor's optimism that is responsible for the upturn he hopes to see. It is based on nothing firmer than hope in the face of a miserable expectation.
I believe that revenues from oil taxation are seriously understated. I find it impossible to do the sums that produce an answer that is anything remotely near the level of oil revenue that the Chancellor of the Exchequer claims he will get. We have heard from Treasury and Inland Revenue officials that 80 per cent. of the revenues from North Sea Oil will accrue to the Government in the form of PRT, royalties and corporation tax. The trouble is that the more wealth we receive from oil, the higher the pound

goes, the more imports come into this country and the weaker our manufacture ing economy becomes. The only way in which one can offset the amount of revenue from North Sea oil is if there were to be a change in our depletion policy. That may be what the Government have in mind. This is a matter of great importance which should be stated as such. The best vaults for our reserves are not those of the Bank of England where we store our gold, but those of the North Sea where we keep our oil: there are no storage charges, the value increases and there is an absence of any security problem associated with guarding a precious metal.
I turn my attention to the Civil Service and the Treasury. There has been concern throughout the Committee that the Civil Service Department's relations with the Treasury are far from being ideal. When we look at the tasks being placed on the CSD, and the amount of control and efficiency that exists, none of us can be sure that the balance between those two great Departments of State is right. This is a matter for further investigation.
Running the economy of our country is obviously a complex business. The Government look at it in too simple a way. They do not take account of investment, the trade unions or manufacturing industry. They subordinate all these matters to the money supply. It is no use reducing all this complexity to the simplification that the Chancellor has just used. The comment has been made that to every complex problem there is one solution—simple, comprehensible and easy to implement—and wrong. That is a fair summary of the economic solution put forward by the Government. Let us hope that they will soon look for workable answers which fit in rather better with the real world in which we live.

Mr. Robert Taylor: There can be no doubt that the Government were elected with a specific mandate to reduce taxation. That implies a specific mandate to reduce expenditure. During the last two decades successive Governments have encroached into areas where their presence should never have been accepted. I confess that many of those encroachments have taken place under Conservative Administrations. Regrettably, it is a fact that when an


intruder attempts to gain entry it is easier to repulse him than to get him out after he has gained entry. We are in a similar situation today. It is easier to prevent new follies by Governments than to rid ourselves of those that are entrenched. Powerful vested interests arise for the sole purpose of ensuring that where the Government have become involved they should not withdraw.
I wish to refer to a specific area of expenditure covered in the White Paper. I draw the attention of the House to the projected expenditure of the Department of Employment, and particularly the Manpower Services Commission. We have heard speeches in this debate criticising the overall expenditure, either for being too great or too small, but we have had few suggestions for specific action either to reduce or expand it. On page 39 of the White Paper the projected real growth of the Manpower Services Commission between 1978–79 and 1980–81 is shown as 13¼ per cent. As one who was elected on a mandate to reduce this expenditure, I want to know why this increase is still projected.
The Manpower Services Commission presides over two areas of expenditure-one big and one small—where in my view, the taxpayer fails to get value for money and where I wish to see substantial reductions.
To deal with the small one first, because it is a good example of where Government intervention has become an accepted feature and where a weak decision has recently been taken to allow the expenditure to continue, I refer to the Professional and Executive Recruitment Service. This has been criticised by the Public Accounts Committee over the years. Each year the books of this small service are balanced by what is known as a social subvention.
The Manpower Services Commission's accounts for 1979–80, which have only just been received by the House, in April 1980, over a year after the closing of the books, show that for the first time the subvention tops £3 million. The payments have gone up by £286,000, and the so-called profit, which has been further sub-vented, has gone up by £175,000 to the princely sum of £275,000. I do not believe that any right hon. or hon. Member

would claim that the 7,000 vacancies that have been filled by the service would have remained empty if the service had not existed. It is a typical example of a Government service that should not be in existence. It is costing the taxpayer money that could be better spent in other directions. In the name of common sense, why did the Minister announce last week that that service would continue under this Administration? It was a weak decision. If the alternative decision had been taken, some small part of the gigantic hogweed of Government intervention could have been dissected.
I now deal with the larger area of expenditure, one which, curiously enough, merits only a small mention in the White Paper. I refer to the Government's involvement in industrial training. The amount involved is hidden under the general heading of the Manpower Services Commission. On page 49 of the White Paper the enormous expenditure is dismissed in one sentence. It says:
 The role of the MSC and ITBs in promoting training in industry is currently under review and the MSC expect to report to Ministers during 1980.
It is inconceivable that the commission will report to the Minister other than to advise a continuation of an activity that forms a substantial part of its organisation. In my view, the same announcement will be made after that review as was made after the review of the activities of the Professional and Executive Recruitment Service. In other words, it will be allowed to continue.
The industrial training boards were set up under the unfortunate Act of 1964. The cost to industry since has been enormous. If these boards are useful, they should be handed over to employers' associations and trade unions, who will ensure their continuity. There is no justification for continuing to pour taxpayers' funds into these organisations.
There are no grounds for claiming that the skilled labour that will be required in boom times will be available as a result of the activities of these boards. Indeed, there are no grounds for claiming that industry is better trained today than it was in 1964.
I mentioned that the accounts of the Manpower Services Commission had only just reached us, although they are a year old. However, they tell us what the


White Paper does not tell us. They tell us the amount of Government funds that go to the industrial training boards and training services. The net amount for the last year for which figures are available is no less than £309,780,416. The White Paper suggests that that will be increased by 13 ¼ per cent. That, to me, is unsatisfactory.
I have spoken against this activity of the Government ever since I first arrived in this House 10 years ago. I must warn the Minister that unless, when he comes to conclude this debate, he tells me that there will be another review—not one conducted by the Manpower Services Commission—the only way in which I can express my anger at this increased expenditure will be to withhold my vote from the Division Lobby.

Mr. Richard Wainwright: When the Chancellor of the Exchequer, earlier this afternoon, made it clear that he would keep miles away from the White Paper, which is supposed to be the subject of the debate, I supposed that he would at least use this occasion to get a message across to the nation about the ruinous anarchy in pay settlements at present, which should be the greatest preoccupation of those in charge of the economy. But not even to this did he seriously attend. Instead, we had a repeat performance of his well-known and rather shop-soiled contempt for economic forecasting and for any attempt to make intelligent glances at the midterm future.
Throughout the hearings of the Select Committee and again this afternoon, whenever I have heard the Chancellor on the subject of forecasts I have been painfully reminded of inbred, old-fashioned manufacturers in the late 1940s whom I attempted to persuade to introduce budgetry control into their businesses. That was a long time ago. No longer do we hear in business those negative and despairing cries asking how a business could possibly be asked to forecast its sales 12 months ahead. How could the directors possibly take account of uncontrollable factors that might occur, and all the rest of the rigmarole that was very quickly swept away when budgetary control became an ordinary fact of life throughout the business world.
In politics and so often, indeed, in this House, we are decades behind the times. That is true also about the quality of the information. The quality of statistics, including some of those in the White Paper, with which on the whole this House somehow still seems, broadly speaking, to be content, is not usually of high standard.
True, the Select Committee approached the White Paper with a great deal of caution, in some cases probably amounting to suspicion. We had reason to do so, because at our first examination of Treasury witnesses a Treasury official, at page 42 of the minutes of evidence, said this about public expenditure White Papers:
 Ministers have taken the view that some of the detail given in previous White Papers, for years some way ahead, has been spurious, because it simply is not practicable, nor is it necessary, to take decisions in that degree of detail for a period so long ahead.
Previous White Papers, ever since Plowden was adopted by this House, have apparently been partly spurious. At a later sitting of the Select Committee, the Chancellor said that in the past earlier White Papers had been to some extent misleading.
In my view—and, naturally, I speak only for myself; a role to which I am well accustomed—all this is not a reason for abandoning the sensible—indeed, essential—job of forecasting; it is simply to try to do it better, and to use with greater care and thoroughness the many sophisticated tools for forecasting that are now available.
I am sad that the Select Committee, under its perceptive and resolute leadership, to which tribute has already rightly been paid this afternoon found itself literally obliged to spend so much of its time auditing the informatison in the White Paper. That was a handicap to us. I conceive that our main job is to examine the policies and the possible consequences of what is set out in the White Paper rather than to audit the statistics that are provided.
I hope that eventually we shall have a national comprehensive auditing service for public statistics, so that the House will receive information of a proper quality and hon. Members, who are not usually trained in this matter, will not have to spend their time checking the


figures, exposing the gaps and showing up the defective computation. That is what should be done by a professional service.
One of the facts that emerged from the audit that the Select Committee performed was the cost of unemployment and how it is met, and it is to this that I shall devote my ration of time this afternoon. The answers that we received in examination on this subject alarmed me, and probably alarmed many of my colleagues. The cost of unemployment is assumed by the Treasury without question to be borne by the dwindling number of people still in work and by their employers, who must become more and more unable to bear the cost as the recession deepens. That was made clear when a Treasury official was asked this question, which is recorded on page 35 of the minutes of evidence:
 If you have an increase in unemployment of about 700,000, what effect would that have on the PSBR? 
The Treasury official replied:
 None in the way we have done these predictions because we have assumed that the flow into the national insurance fund is balanced, so that if you have an increase in unemployment and, therefore, further increases in social security payments, they are balanced, as it were, by an increase in national insurance contributions.
That is a procedure that the House should not tolerate if it wishes to have proper control of enormous sums of public money. The yield of national insurance contributions is almost half the total yield of income tax, and rather more than one-third of the total yield of all taxes on expenditure, VAT, excise duty and the rest. That is an enormous sum, yet the Budget speech contained no reference to this heavy tax on jobs, or to the fact that within five days of the Budget national insurance contributions were to be jerked up once again. There is very little control by the House of, and very little debate on, a major part of our taxation system.
I hope that I shall not weary the House by giving briefly two examples. It was estimated that one consequence of the Budget was that a single person, without a mortgage, earning £100 a week, with very little expenditure on taxable goods, would benefit from the income tax changes by 49p per week but would lose

from the increase in the national insurance contribution—which was not even mentioned in the Budget and has no part in the Finance Bill—36p per week. Whilst the press, the tame media and all the rest of the Tory apparatus of brainwashing the people have a tremendous bonanza about the marvellous lift in the income tax threshold, not a word is said, either in the House or outside, about the cancelling-out effect of insurance contributions.
The result is much worse for a self-employed professional man, married, with a small child and a mortgage. His estimated benefit from the income tax change in the Budget has been reliably estimated at £1·78 per week, but the national insurance contribution increase makes him £2·36 worse off. The net result of public fiscal changes during the past month for this chap, who is by no means untypical of our professional groups, is that he is seriously worse off.
Where is all this leading us? Because of the absurd convention that the whole cost of unemployment is borne by those who are still in work and those who are still employing people, my forecast is that if, as the Select Committee was advised, unemployment reaches about 2 ½ million in 1983, the total "take" of national insurance will be not the present rate of just over 20 per cent. of gross pay met by the employer and employee together, but well over 25 per cent., which is a staggering increase in a peculiarly arbitrary and clumsy form of direct taxation.
All that is wrapped up in the public expenditure White Paper, and had to be chiselled out by severe questioning in the Select Committee. It is high time that all these taxes were brought within the House's direct control. The national insurance contribution has become a major budgetary item and should have to figure in the Finance Bill so that it can suffer the scrutiny of the House, just as do the smaller taxes.
That is only one part of this immense White Paper, but if the Select Committee has done a service in bringing it out into the open it is a good augury for the future of that procedure.

Mr. Geoffrey Rippon: The hon. Member for Colne Valley (Mr. Wainwright) frequently reminds me of


the observation made by Lord Curzon that Liberalism is in theory a pestilential heresy and in practice a typical illusion, but lately he has been in good company as a member of the Select Committee on the Treasury and the Civil Service. The House should be grateful to the Committee for its extremely important second report, which lends greater weight and usefulness to our discussions on public expenditure.
I wholeheartedly support the Government's objective of bringing inflation under control, particularly by reducing public expenditure and the public sector borrowing requirement. However, from the time of the Chancellor's first Budget last June, I have had serious reservations about the means by which this objective is being pursued. My reservations are similar to those expressed in the Select Committee's report and reiterated by my right hon. Friend the Member for Taunton (Mr. du Cann) this afternoon. They are reservations that, in the words of my right hon. Friend, put the whole strategy at risk.
First and foremost, I believe that interest rates should be reduced, and quickly. To a large extent they dictate rather than follow the inflation rate. Necessary borrowing is being made dearer rather than unnecessary expenditure avoided.
In public expenditure terms, higher interest rates over the past year have added more than £500 million a year to the taxpayers' and ratepayers' bill. Investment, not consumption, has suffered most. Exchange rates have been distorted, trade is running down and unemployment is rising, and still the inflation rate nudges 20 per cent.
I entirely agree with the Chancellor of the Exchequer that this does not affect Britain alone. These tendencies are to be found elsewhere. I am disappointed that the International Monetary Fund has made so little contribution to solving these problems. The Government should take an initiative in a collective action to stop an interest rate war which to some extent we started but which might be as dangerous as the protectionism of the 1930s.
The doubts that I expressed on 13 June last year about the dubious nature of the Government's statistics, particularly with regard to the money supply, their failure

to distinguish adequately between productive and non-productive expenditure, and their allowing the Clegg Commission to continue its work, have been reinforced by the report of the Treasury and Civil Service Committee. I also express reservations about the extremes of monetary policy. I therefore welcome the fact that the Committee has in mind a wide-ranging review of that aspect of economic strategy.
However, while one can draw a distinction between assumptions and forecasts, one must admit that the Chancellor was right when he said that we should be wary of undue preoccupation with predictions and measurements. If the policy is changed, the statistics change, and it may be that we shall have to change the policy.
Whether they are an assumption or a forecast, the projected unemployment figures are not acceptable, either at 18 million in 1981–82, as the Government assume, or between 2·2 million and 2·5 million, as the Select Committee suggests. That level of unemployment is socially and economically unacceptable. It represents a tragic waste of human and national resources. As we heard this afternoon, it not only adds hundreds of millions of pounds to the cost of social security benefits but results in a loss of revenue as well as productivity. No doubt excessive wage claims and foolish strikes and stoppages have destroyed jobs, and may continue to do so if the situation is not reversed, but there appears to be a greater realism today. Most people want to work. The plight of jobless school leavers must be a matter of increasing concern.
I remember the late Iain Macleod saying that he agreed with everything that the right hon. Member for Down, South (Mr. Powell) had to say about market forces except in terms of regional policy. In the next few years we shall have to give higher priority to regional policies as part and parcel of our general strategy.
In the past, too much emphasis was placed on attempts to preserve existing jobs or on aid and subsidies that did not get to the root of the problem. However, the Government must now help to ease industrial change in those regions dependent on older declining industries. More emphasis must be placed on regional initiative and self-help, but the Govern


ment have a definite role to play. Direct Government assistance must be given to projects most closely related to the number of new jobs created. The procedure for regional development grants now under review must be overhauled to ensure simplification, greater cost efficiency and greater assistance for smaller firms and first-time applicants.
There is a further important manner in which the Government influence events. I am all for the operation of market forces, but we must recognise the extent to which the Government are directly in the market and part of those forces. They determine the minimum lending rate; they are responsible for the levels of public sector pay; and they fix cash limits for nationalised industries. All that has a direct influence—to some extent even dictates it—on what happens in the private sector.
I am all for cash limits rather than direct day-to-day interference in nationalised industries, or, if I may say so, in the activities of local authorities. However, there is no escaping ultimate ministerial responsibility. At present, nationalised industries are half slave and half free. Having been at one time or another the political head of virtually all the nationalised industries except the Post Office, I have some sympathy with an observation of the late Aneurin Bevan when he said that it was time to bring nationalised industries into public ownership.
Whatever the terms and conditions of their appointment, and whatever they may think when they walk into their new offices, the chairmen and boards of nationalised industries have to conform to Government policy. That is why I am glad to note that the Select Committee will look into the important question how to finance nationalised industries, which is essentially the responsibility of the Government and the House.
The Government are in the market as a major purchaser of buildings, goods and services. That is why I welcome what the Select Committee said in paragraph 23 of its report about the balance in the Government spending proposals between capital and current spending. The Committee is right to say that

 too muco emphasis has again been given to cutting investment expenditure rather than current expenditure, at least in 1980–81.
I have always asserted that the Government should use their power as a client, particularly of the construction industries, which are in great difficulty at present, selectively to create national assets and wealth and to assist areas with the highest levels of unemployment.
A lot has been said this afternoon about the North-South dialogue in global terms. In Britain today we have to avoid the creation of two nations, the South and the North—the South relatively stable and prosperous, as indeed it was virtually through the 1930s, and the North steadily declining, with industrial stagnation and growing despair, especially among the young. That danger must be, but is not yet, comprehended in the Government's expenditure plans.

Mr. Gordon Wilson: The speech of the right hon. and learned Member for Hexham (Mr. Rippon) was powerful and showed signs of a social conscience that is sadly lacking in many other Conservative Members. That is where the Government are failing in their approach to the problems of the economy and people.
My constituency by no means has the worst unemployment statistics, but male employment there is up over 10 per cent. I believe that the precarious situation of our local economy is partly due to problems created by this Government, yet they show no wish to try to bring down the rate of employment. That belief has been consolidated by studying the public expenditure White Paper.
When the Prime Minister came to office a year ago she was gracious enough to quote from the healing words of St. Francis of Assisi. Perhaps she should have chosen the words of another biblical text:
 To those who have will be given, and from those who have not, there will be taken away.
That is the philosophy that the right hon. Lady's Government have exemplified.
About 40 primary teachers will graduate from the Dundee college of education this year. So far, not one has the offer of a job. That can be laid at the Government's door in cutting back education expenditure—a policy implemented by a


Conservative local authority even more radical than the Government.
Young people will be leaving school without work. I shudder to think what unemployment in my area will be if the Government allow the local shipyard, with its 1,000 jobs, to go to the wall.
The Chancellor of the Exchequer hinted that Government policy may change. Their policy so far has helped us on the road to industrial ruin. Harm has been done to manufacturing industry, output and regeneration in areas of high unemployment.
The figures quoted in respect of the Government's overall strategy are nebulous. That judgment was upheld by the Fraser of Allender Institute at Strath-clyde university in a recent report. That report also commented on nationalised industries and said that it was the aim of the Exchequer partly to eliminate overall deficits—currently about £2·2 billion—over the next three years.
The economists at Strathclyde said:
If this is done, as in the past, by requiring them to raise the prices of their products, then of course that will directly contradict the ultimate objective of reducing the rate of inflation. If, on the other hand, it is done by improving the aggregate product'vity of their industries, then this will require quite radical changes in some of their organisation, incentives and attitudes, about which neither the government nor the relevant civil service departments have had (apparently) any thoughts.
The third point that they make is that with their
 obsession with aggregate monetary and fiscal variables the Government are in danger of falling into the same trap as their ' Keynesian ' predecessors.
They point out that even the most dedicated anti-Keynesian these days would favour increasing rather than decreasing Government investment.
The White Paper will have a substantial impact in Scotland. It is worth putting it into the Scottish context, as the oil revenues have been mentioned. In the last fiscal year the revenues were estimated at around £2 billion. That would represent 30 per cent. of public expenditure in Scotland. By 1985–86, the revenues, on a very low estimate, of about £10·5 billion—some forecasters have put them at about £15 billion—would exceed expenditure by 109·4 per cent.
It is against that background that we

see the cuts. No one is against cuts if they are designed to eliminate waste, but when they affect social services, cause human despair and create an inability for families to cope, a halt must be called. There is a danger that, in relating our comments to macro-financial aspects, we shall forget that the policies now being pursued will make it very difficult for families and individuals to cope.
One of the mistakes that the Government may well have made is to underestimate the contribution from oil revenues. The stockbrokers, Phillips and Drew, made an interesting estimate a short time ago, and I hope that the Government will take this matter on board.
Industrial investment is of particular worry to Scotland. To this end I draw attention to the figures for the period 1969–70 to 1977–78. In the first year of that period industrial expenditure in Scotland rose by 9 per cent. The following year it fell by 3 per cent. and the year after by 8 per cent. However, in 1972–73 it rose by 12 per cent. In 1973–74 the increase was 27 per cent.; in 1974–75 it was 35 per cent.; and in 1975–76 it was 56 per cent In 1976–77, under the last Labour Government, it fell by 5 per cent. and the year after by 33 per cent. So the Opposition have to take responsibility for the diminution, if not the destruction, of the then existing regional policies.
The relative figure for unemployment in Scotland, which was improving during the early and middle 1970s, has been worsening in recent years. The Government should therefore put more money into the development of industry. That would be one of the best uses to which the oil revenues could be put. It would generate assets, which would create wealth.
In recent years there has been evidence that industrial investments have been inadequate to cope with the competition from the Republic of Ireland in attracting industry. The United Kingdom incentives have been found lacking, or too complex. The result has been that thousands of manufacturing jobs have been lost to the Republic. That would not have happened if this country had maintained its expenditure on regional assistance. As the right hon. and learned Member for Hexham said, there will be a cleavage between the North and the South—between the rich and the poor.


Those who want a fair society would not welcome that.
Equally, those who seek a fair society will not accept the peculiar and drastic way in which housing expenditure has been cut in the White Paper. The Shelter report for Scotland shows that there will be a drastic cut-back. Housing, of all the recipients of public expenditure, has been singled out for the most extreme treatment—a cut of 292 million, or 42 per cent. of the housing budget. I represent a city in which there are many old dilapidated tenement flats and buildings, many of which need to be knocked down. Many housing estates require to be renovated and brought up to standard. Indeed, the same applies to many modern housing developments. Peculiarities in design—the responsibility of central Government, as they stem from central Government advice and guidance to local authorities—must bear some blame for houses that are inadequate. In them insulation and ventilation are so poor that people are being driven out by dampness and condensation. That alone will require millions of pounds to put right, yet in the face of that the Government are to cut back on expenditure. The situation in England is similar, but there are 170,000 families in Scotland on public sector housing waiting lists. Anyone who imagines that the housing problem has been dealt with is living in cloud-cuckoo-land.
There will also be an impact on the construction industry and employment in it. If there is any way of curbing some of the excesses of unemployment and of quickly expanding and reflating the economy, while turning out the productive assets to which the right hon. and learned Member for Hexham referred, it is by helping the construction industry. In Scotland the industry is not exactly operating at peak capacity. Some private contract and industrial work has been coming through. Once the housing sector cuts have an impact there will be gross increases in unemployment in construction. I cannot understand why housing has been singled out for such savage treatment and why the Government are prepared to allow the rundown in the economy to be channelled through the construction industry in this way.
I could go on at some length picking out many examples where Scotland will

be affected by these public expenditure cuts—cuts that are unnecessary and undesirable in current circumstances. The Government should think again. They have seriously miscalculated how much money will be available from oil revenues, and they should make sure that the economy does not crunch further into recession. If they are cynically hoping that in two or three years' time they will be able to reflate the economy and thus float themselves home at a general election, they will find, if they run into too deep a recession now, that not all the money arising from oil or any other source will be sufficient to do that, so in their own political self-interest they should think again.
There is to be a cut-back in research into non-nuclear methods of generating electricity. I cannot see that happening. I cannot see the reason, when we are obviously on the verge of an energy crisis. I cannot understand why no allowance is made in the White Paper for increased expenditure on conservation and improved methods of insulation to ensure that we surmount the energy crisis when it comes. To cut back on energy development and alternative uses at this stage beggars the imagination. I can only hope that the Government will think again.
It is for the Government to decide how best to run the economy. I have serious doubts about their methods. The Opposition have been flushed by success following the recent local elections. My party did not perform all that well, although I would make clear to those who have not studied the figures that our vote has improved since the general election a year ago. That fact has been obscured by the loss of seats.
The Opposition in Scotland have a duty to push and cajole and if persuasion does not work, to bully the Government into changing policies that are doing so much harm. If the Opposition fail in that task within the currency of this Government I am sure that the people of Scotland will have an alternative to which they can turn.

Mr. Eric Cockeram: I seek to join in the debate because I have serious doubts about the level of Government expenditure envisaged in the White


Paper. We are going through a period of world recession from which industry in this country, a trading nation, cannot be insulated. Yet, this year alone, the Government are planning to spend some £8 billion more than they are raising in taxation, further adding to the national debt. It is to the shame of this Government that if they continue on this path, they will have the unfortunate distinction of presiding over the nation's affairs when the national debt passes £100 billion. That is a formidable sum. I believe that the Government Front Bench needs to be reminded that only 11 years ago the national debt under a Socialist Government was reduced. That could also be done under a Conservative Government.
In consequence of this heavy borrowing requirement by the Government, small businesses have to labour under a very expensive borrowing rate of 17 per cent. Unless the Government tackle the level of their expenditure, they cannot expect industry to survive with a burden that has gone on longer, I believe, than the Government expected when the rate was announced.
My right hon. Friend the Member for Taunton (Mr. du Cann), in a lucid and helpful speech, drew attention to the number of civil servants. He pointed out that there are 48 per cent. more civil servants per million population in this country than in Germany and 68 per cent. more than in France. I do not believe that we are getting value for this level of expenditure.
We have 40 permanent secretaries, 150 deputy secretaries, 575 under-secret-aries, 1,150 assistant secretaries, 5,200 principal secretaries, 8,000 senior executive officers, 22,000 higher executive officers, and over 50,000 executive officers. Those are the officers. I have not yet come to the troops. The cost is enormous. In addition, there are the Civil Service index-linked pensions, for which civil servants make a notional contribution of only 2·6 per cent of salary. Anyone in the private sector would willingly make a notional contribution of 2·6 per cent. of his income in exchange for an index-linked pension when he retires.
The cost of financing these index-linked pensions in 1978–79, the last year of the previous Labour Government, was

£390 million. At the end of this Parliament, presumably in 1983–84, the cost will be £560 million in constant terms—a 40 per cent. increase. The cost of financing index-linked pensions in the Civil Service represents one of the highest increases in Government expenditure in the whole White Paper. A 40 per cent. increase in real terms means, inevitably, more than a 100 per cent. increase in sterling terms.
What is to be done about this situation? The Government are nibbling at the problem. They are not cutting the Civil Service with a knife. They are waiting for Annie to get pregnant or Betty to leave when she gets married and failing to replace them. In consequence, after a year of Conservative Government, the Civil Service has been cut by under 5 per cent. It is easy to cut the Civil Service by the first 5 per cent. It becomes more difficult not to make replacements as the second 5 per cent. of people leave and is virtually impossible thereafter.
The only way to cut the Civil Service is to cut the functions performed by that administration. The public do not believe that for the taxes they pay they are getting value from the Civil Service and a level of administration that is greater than that of any of our partners in the Western world. We must cut functions. That involves paying compensation to those who have to leave.
Generous compensation has been paid to dockers to leave an industry that was overmanned. The dock labour force is about one-third of its level a decade ago. A similar approach is being adopted in the steel industry. The number of miners is infinitely smaller than it was 20 years ago. British Rail has also offloaded labour. Why cannot this be done in the Civil Service? It can be done, if the will exists.
Such action has been taken by the Government to a small extent. My right hon. and learned Friend the Chancellor eliminated exchange control. A group of civil servants ceased to have jobs. That was not a matter of waiting for someone to leave and failing to appoint replacements. It was a positive decision that a function performed by Government was no longer necessary. That is an example of what has to be done to a greater degree.
Hon. Members can all make sugges


tions about where cuts could be made. I suggest that our training boards are not fulfilling a need. At a time when there are 1½ million unemployed and a training board exists in the construction industry, it is nonsensical that plasterers, plumbers, carpenters and bricklayers should be unobtainable. It should be possible to train people to fulfil those functions. I do not believe that people are served any better in shops, or that cars are filled with petrol more efficiently than 20 years ago, because there is now a distributive industry training board. This sort of quango and bureaucracy should be stopped.
In my constituency in Shropshire, and in the two constituencies immediately to the west and to the east, there are three different quangos offering money to tempt industry into that rural area. A number of hon. Members have spoken of the North-South divide. In some areas of the North of England there is a desperate need for labour, while Government money is employed through three different quangos in my constituency and its immediate neighbours.
If the Government really want to cut the number of civil servants and produce in Britain the ratio of bureaucrats to people who actually work and earn their living by contributing to the national wealth that exists on the Continent and elsewhere, they must cut functions instead of relying merely on a policy of failing to replace those who leave.

Dr. Jeremy Bray: When hon. Members turn their minds to cuts in public services or other services they sometimes run out of ideas. I ask the hon. Member for Ludlow (Mr. Cockeram) when he last put petrol in his car or when he was last served in a shop. He attacked the Financial Secretary for not getting Annie pregnant quickly enough. Treasury Ministers are guilty of many things, but that is an undeserved slur.

Mr. Cockeram: I run one of the businesses that the hon. Member instances, so I have some knowledge.

Dr. Bray: I hope that the hon. Gentleman gives as good service to his customers as some of the shops in my constituency.
The Select Committee has given a sharper focus to the debate on the public expenditure White Paper than has been the case in previous years. However, it can be regarded only as a start. I accept that it did not tackle the most difficult issues. The Chancellor of the Exchequer was able to present the Committee's conclusions as pointing to bigger cuts in public expenditure in general. The Committee commanded unanimous agreement on the Conservative Benches because that thought was in the minds of Members on that side.
I probably speak for my colleagues when I say that we wanted to point to the inadequacies of the arguments in the public expenditure White Paper because they point to the breakdown in Government policy in that the consequences of following through the arguments would be as totally unacceptable on the Government Benches as on this. The explanation does not lie in the peculiar membership of the Committee, as some newspapers tried to suggest. That theory does not give sufficient weight to the effort that the Committee made to arrive at dispassionate conclusions.
The conclusions would not have been much different if the membership of the Committee had been entirely different. It is a good Committee, particularly, if I may say so, in its Conservative Members. In the balance of their opinion, the Committee members were representative of the views of 90 per cent. of hon. Members from either side of the House.
The dangers are real. I hope that they will make an impression on the House and upon Government policy. First, there is the unwarranted optimism about the cash requirements of the nationalised industries. We must examine investment criteria and pricing policies. It cannot be right to cause industries to be wholly self-financing when the private sector—the commercial and industrial companies—are running a £6 billion deficit on a far larger proportion of their total turnover or assets than the nationalised industries.
The vicious effect of Government housing policies is mentioned in the report. The Committee was right to refer to the failure to spell out how the policy is to be implemented. Council house sales will not be a source of finance, because


they will be financed by borrowing from local authorities.
The scope for tax cuts is highly vulnerable to the assumptions. Only a 0·5 per cent. fall in the average rate of growth of GDP is needed for the possibilities of tax cuts in the last two years of this Parliament to disappear. The underestimation of North Sea oil revenues is not an unconvenanted benefit. Certainly it would help to ease the public sector borrowing requirement, but it would exacerbate the problems of manufacturing industry, which faces an unrealistic exchange rate. The net effect on the economy would be to put the industrial and commercial sector further into deficit, which is the most grave threat that we face.
In terms of the arguments in the report, the medium-term financial strategy, which we are not allowed to call a plan, far from reducing the uncertainty of Government policy, has increased it. The Government have left uncharted the whole impact of public expenditure for future years.
The reasons that the Chancellor gave for refusing the Committee the information that it sought were disingenuous. If the Government believe that they should not forecast matters that they cannot control, as one of our advisers said in Committee, they should abolish the meteorological office. The Government are shy about publishing economic forecasts because they have an element of responsibility for the economic out-turn.
While economic forecasts are highly uncertain, uncertainty overall is reduced by publishing forecasts and by showing how policy will respond to departures from the expected course of events. The Government accept the logic of that argument in their medium-term financial strategy, in the monetary sector. However they reject it everywhere else, thus compounding the uncertainty. I suspect that the real reason why the Chancellor does not want to come clean and provide fuller information is that he does not want to be pilloried for planning the unpleasant consequences of policy, such as rapidly rising unemployment and the decline of manufacturing industry.
I am sure that the Chancellor does not want to make a direct challenge to the Committee or to the House. I hope that he will go cautiously as we try to work

out a modus vivendi between the Treasury and Parliament, represented by the Committee, on the question of disclosure. The issue must be seen in the context of the developing work of the Committee. We have produced only our first economic report. We have embarked upon a major inquiry into monetary policy. The line that we have taken is to establish communication with all the prime economy watchers—the forecasting teams at the London Business School, the Cambridge economic policy group, the National Institute, Phillips and Drew and the Economist Intelligence Unit with the Treasury model.
Give or take one or two groups, most people would accept that they cover the field. With their combined evidence and advice we were able to carry out a serious review of the Budget and the public expenditure White Paper. Treasury Ministers should not have been surprised by the general tenor of our conclusions. Behind that there is a level of analysis underlying policy which we shall attempt to tap in our inquiry into monetary policy. We shall go straight to the operators in the Treasury and the Bank of England and to the primary researchers, both as advisers and witnesses, and not only to the gurus, interpreters, and traders in secondhand ideas.
There has been a sea change in the level of technique required to carry out a serious economic analysis, It has become highly technical, even mathematical. Some in the older generation of economists and economic journalists cannot cope with the technique, and scoff at it. However, there is not much dispute in the younger generation about where the significant work lies and how to approach it. We have ample help among our advisers. We have sent out an exhaustive questionnaire on monetary policy which is being worked upon not only in the Treasury and the Bank, but by a long fist of witnesses at home and abroad. The question is whether the Committee can successfully interpret the evidence for the House. I believe that it can and, indeed, that it must if it is to illuminate dispassionately, as the current report has, some of the assertions underlying present and recent policies.
I sympathise with the Chancellor when he is attacked in another place by Lord Kaldor who argues that one relationship


does not exist, that another has broken down and that the reality is the opposite of what the Chancellor believes. Lord Kaldor's arguments need looking at, because they are not necessarily above criticism. A great many other arguments also need to be looked at and their balance weighed by people with the proper political preoccupations and experience—the kind of experience and judgment that can be offered by the Committee.
With the Committee—as the Governor as the Bank of England put it—formidably advised, if Ministers and the Treasury withhold information and seek to obstruct rather than to work with the Committee, we face a serious position. Against that background, let us examine the Chancellor's reasons for not giving the information that is sought.
First, the danger of undue reliance on specific figures and the need for due regard to past errors is cited. We can accept that any Government would be extremely foolish to work with a single set of assumptions or a single forecast. A Government will have a view of the pattern of probabilities and probable responses to the situation as it develops. The Chancellor acknowledges the obligations of the Government to make clear their view of monetary strategy to assist in the formation of expectations and to reduce damaging uncertainty.
Those precise arguments apply to the construction industry, to the industrial trading boards, to manufacturing industry, which must make massive investments for the future, and to the oil companies investing in the North Sea. Are they to be left in the dark, completely uncertain, because no one is marshalling the evidence and no one is saying how the Government will react to situations which will deeply affect their own plans? Will nobody spell out the depletion policy which perhaps lies behind the conservative estimates of the Government on North Sea revenues? If the Government are so highly selective about their pattern of disclosure, that gravely damages the effectiveness of decision-making in the economy as a whole.
I suspect that the Chancellor is not aware of the practical methods by which a view can be presented. By all means

let him express it within a framework of monetary targets if he wishes. But the Chancellor has never sought to meet the Treasury's own academic panel. No Treasury Minister has done so. The Chancellor has not asked for simulations of how his own rules can be expected to work in practice in an uncertain world. He has not sought the design of better rules to take into account his own role in the formation of expectations.
As for market sensitivity, I hope that the markets are sensitive, and I hope that we will shift them. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) is not in the House at the moment, but he will recall that he asked a parliamentary question in 1967, shortly before devaluation. I do not know whether he would ask that question again had he the opportunity.
Of course we need to act responsibly in this respect. It is a reason for caution, but not for non-disclosure. It is, partly, a matter of timing. The Treasury has undertaken to give us a commentary each month on the rationale behind its operations and those of the Bank of England in the money markets. It will give us that not at the time when the operations are being carried out—we can understand the force of that argument—but shortly after the money supply figures are published: that is to say about a month later than the event.
The publication of information will certainly have an effect on the markets. That information is needed to enable the markets to react constructively. Those who have spoken to brokers in gilts and others will know the acute criticisms now being made by some people of the ways in which the markets are being discouraged from responding to information by the way tap prices are set. If we get the general logic right the movement should be from the sensitivity argument towards greater disclosure and not away from it.
Ideas on the mechanics of disclosure were, I thought, spelt out in the Industry Act 1975, which would not be on the statute book if the Chancellor and other Treasury Ministers had not voted for it in the last Government. I thought that I had agreed with Mr. Edmund Dell, at the time, on how that schedule would be implemented. What is called for is a


base forecast, and variants, about none of which the Chancellor is asked to put his hand on his heart and say that that is what he believes.
I disagree with my right hon. Friend the Member for Ashton-under-Lyne when I say that I believe that the Chancellor is entitled to his private thoughts and to the ways in which he particularly balances the conclusions he reaches. What the Chancellor is not entitled to do is to preempt half the economic and analytical capability of this country by cooping it up in the Treasury and not telling the rest of the world what kind of balances of arguments are emerging. It is that disclosure of the structure of the argument which I believe the Committee needs, and towards which I believe it is moving.
I agree that the real world out there—of which the Chancellor is so fond of speaking—is where things happen. But they also happen in this place, and we cannot expect others—whether they be fitters operating numerically controlled machine tools, accountants called upon to operate budgetary control or municipal treasurers having to gee-up the rent collection system in their boroughs—to act more efficiently in the modern world if we in this place, and the Treasury, refuse to use modern methods and analytical techniques that are available to us.
As the Select Committee has already shown, there is room for improvement in our decision-making methods and I hope that we shall see progress. I hope also that that progress will be encouraged—as I believe it can be—by Treasury Ministers themselves.

Mr. Terence Higgins: My right hon. Friend the Prime Minister, in a widely reported speech a few weekends ago referred to public expenditure and said that the Government were determined to follow the right policies even if that meant that the Conservative party lost the next general election.
That was a remark that we would all recognise as reflecting the forthright attitude of the Prime Minister on these issues. We could also add that, if the Conservative Party does not follow the right policies on public expenditure, it will most certainly lose the next general election. That being so, I think that there

are a number of important points which arise in this debate.
I most certainly do not argue for a U-turn in Government policy. On the contrary I argue that that policy needs to be pursued with even greater vigour in relation to public expenditure than it is being pursued at present. I believe that my hon. Friend the Member for Ludlow (Mr. Cockerham) would share that view.
I view with concern a tendency for some of the positions adopted by the Chancellor of the Exchequer a year ago to have been, to an extent, reversed in the recent Budget. For example, we have witnessed a tendency for taxation to be raised rather than reduced and a tendency also for the move away from direct to indirect taxation to be reversed. More particularly I think that in the context of public expenditure we have not made the progress which many of us hoped for.
It is worth noting that the Chancellor referred today to bringing down the level of public expenditure rather than to cutting public expenditure. I believe that the House probably recognises now that the White Paper dealing with 1980–81 public expenditure—introduced last autumn—was an extremely inadequate document and I was worried at hearing the Chancellor say today that he had now completed his review of the previous Government's public expenditure programme. I believe that we must make further progress in this direction if we are to get the right economic policies which will bring down interest rates and get the economy back on an even keel.
There are one or two particular points which I would like to make in relation to the Select Committee report which has featured so much in speeches in this debate. In particular, I should like to say something about public sector pay, which, after all, is a massive element in Britain's public expenditure. I should also like to say something about the extent to which estimates of the future can be quantified.
In that context, it is right to stress that the Select Committee was not concerned with appraising the Government's economic policy in its report. By and large, it took that economic policy as given and sought to examine the foundation on which the Chancellor formulated that policy. No doubt, in due course, the


Select Committee will examine Government economic policy, but that is not what it did in its report on this occasion.
I turn first to public sector pay, The evidence which we took and the report which we published attracted considerable attention, because many people thought at the beginning that the cash limit on public sector pay was 14 per cent. It then transpired in the evidence that the actual increase in the central Government pay bill for the year was likely to be between 24 per cent. and 25 per cent., a very much greater figure. As a result, there was correspondence between my right hon. Friend the Member for Taunton (Mr. du Cann) and the Chancellor. We can all understand the Chancellor's anxiety, which I certainly share, not to create the impression that a 25 per cent. increase in pay was the current going rate. But at the same time we can recognise that the 25 per cent. figure is the relevant figure in relation to the public sector borrowing requirement and the control of the money supply. Therefore, what gives me great cause for concern is the way in which it is proposed to control public sector pay both this year and next year.
We were told that the main reason why there was a difference between the two figures was the lagged effect of staged agreements made under the Clegg decisions, which rightly or wrongly the Government felt obliged to implement. That being so, the Select Committee's first report made a recommendation with regard to next year's control and cash limits. Certainly, I do not think that the situation this year can be regarded as satisfactory. But if I understand it correctly, the reality is that the cash limit for increases in pay is 14 per cent., although one can perfectly well reach a settlement within that limit and promise that next year, and if need be the year after, one will give staged payments which are not covered by that cash limit.
The position in which we shall find ourselves next year is that the individual Departments which are covered by cash limits will have a cash limit which covers the previous pay bill and the amount of the staged increases. There will then be a separate cash limit for extra increases next year. It does not seem to me

that that double system will be an effective way of cutting public expenditure. Indeed, if it were to be an effective way of controlling public sector pay next year, there is no reason why that effective control could not have been exercised this year as well. Therefore, I believe that the Select Committee is absolutely right to draw attention to what could prove to be a major loophole in the system. We shall need to consider that very carefully when the matter comes before the House in the form of cash limits—Estimates.
The other point to which I want to turn my attention is the medium-term financial strategy. I greatly welcome the fact that the Government have set out that strategy. But we must recognise that it is a target and that, so far as we can establish, it is nothing more than that. It is simply the way in which the Government hope and intend to see taxation, public expenditure and the money supply moving over the period of the White Paper.
That being so, there are again some causes for concern with regard to the foundations. In the short term, I find it very worrying to be told " We shall control the money supply effectively, but we shall squeeze another £700 million out of public expenditure by a rigid imposition of cash limits. At the same time, we still expect there to be a substantial shortfall between the cash limit and what is actually spent by Departments". Taken together, those two things seem to me to be open to considerable doubt. On top of that, there is a contingency reserve.
We then come to the longer term, where about half the increase will be in savings from the nationalised industries, either in making them more efficient or, presumably, by increasing prices. I think that the Committee was right to say that it is difficult to ascertain the credibility of that statement and, indeed, the whole medium-term financial strategy, unless the breakdown is given. Although the Chancellor gave some indication of particular items, we need to see the whole picture.
It was all very well for the Chancellor to say this afternoon "Fine, the Committee can go and see the individual Department concerned." I hope that it will do that. But it was rather odd that


not already been done and summarised within the Treasury. That being so, there are very grave doubts; because, if that is so, the PSBR will be higher than we would like it to be.
Nowadays, it has almost become a platitude to say " Well, it is very dangerous that the Government are having to cover this enormous PSBR at very high rates of interest, because in those circumstances the Government will hardly be able to afford to see a reduction in the rate of inflation ". What is more puzzling is the fact that apparently the Government are borrowing a very long way ahead. They do not recognise the fact that high interest rates are now being paid. In fact, they are borrowing at very high interest rates way into the future. Goodness knows, we are all familiar with the problems which our constituencies face as a result of the War Loan. We have all been told how terrible it is that our constituents lent money to the Government through the War Loan, and we have been asked whether the Government will do something about it. This is almost the reverse of War Loan. We shall be stretching years into the future and finding that the Government are paying out much higher rates of interest than they need do. Here again, there is considerable concern.
On top of that, we find that the Government have been so successful in selling this long-term debt that from time to time they must pump in another £500 million or so in order to get the thing back on an even keel and ensure that there is not too large an upsurge in money supply. Therefore, although I recognise that the medium-term financial strategy is a great advance in terms of the Government stating explicit targets, all those points are one reason for saying that the Select Committee ought to look into the matter further and that the House of Commons itself ought to do so, as it is doing this evening.
In that context, I find it worrying that in regard to the period covered by the White Paper, though not the period covered by the Red Book, the Government seem to be adopting an anti-quantitative attitude, for want of a less eloquent expression—[Interruption]—I am glad that my hon. Friends agree, and I am open to any suggestions that they may care to make. The fact is that having set out the he created the impression that that has

medium-term financial strategy, the Chancellor is right when he says " I am very doubtful about economic forecasts. They are terribly unreliable and there are great uncertainties in the economy ". We all recognise that that is the position. But, none the less, when planning public expenditure five years ahead, all Governments must take a view as to what they think will happen, if not explicitly either internally or externally, at least implicitly in relation to the Government machine itself. If that is so, there is a case for making that explicit and for letting the House know what the position is.
We all recognise that the forecast may well turn out to be wrong, but unless we have an overall picture there is no way in which we or the Chancellor can ascertain whether the figures are internally consistent and add up. Therefore, it is important to have more information. It is not enough for the Chancellor to say " Well, we have set out our target in the medium-term financial strategy of public expenditure and taxation and, therefore, of the money supply ". We all know that the economic impact of those variables on the money supply and on the public sector borrowing requirement depends on a detailed breakdown. A case can be made for going into this issue in detail, but not necessarily in terms of enormous and elaborate economic models. Such models are for experts and enthusiasts. We should be given a breakdown similar to that in the Red Book, covering a year or 18 months.
The White Paper points out that one should look in the Red Book for an economic forecast. However, the Red Book does not cover the period considered by the White Paper. There is a strong case for greater detail. I hope that we shall get some co-operation. The Chancellor of the Exchequer and the Select Committee are on the same side.

Mr. Bray: Mr. Bray rose—

Mr. Higgins: I shall not give way, as I wish to bring my remarks to a close. We should work towards a system which encourages a free exchange of views, and an opportunity for frank discussion. However, the uncertainties must be known. The Government may publish such forecasts, but that does not mean that they can necessarily control the


economy. We know that the Government's ability to control the economy is extremely limited. The Chancellor of the Exchequer has not applied the argument that I quoted to forecasts in the Red Book. I am unclear why the Red Book's forecast cannot be extended.
I am deeply concerned about the level of public expenditure. I am worried about its effect on the public sector borrowing requirement. We are still trying to control the money supply. We have a very large PSBR, and we are borrowing at high rates of interest. It is important to improve the supply side of the economy. However, at the end of the day an increase in the supply side turns not merely on greater efficiency, better management and industrial relations, but also—crucially—on the level of investment. We must therefore reach a position that enables us to cut the PSBR and reduce interest rates. The rate of interest, in relation to the rate of return that industry can get, will then allow industry to make a profit.
On a more partisan note, the Conservative Party is in danger of being in favour of the profit motive and sanction of losses at a macro-economic level. Indeed, I have always been in favour of that. However, at the same time it is difficult for profits to be made, because of the way in which the economy is being managed at a macroeconomic level. Profits must be created. People must be given the opportunity to make them. Unless that is done, we shall not be able to get the supply side of the economy right. It is therefore essential to get public expenditure under control. In addition, we should cut it significantly in real terms. I must tell the Chancellor that I do not believe that we have made sufficient progress in that direction.

Mr. David Ginsburg: A noteworthy feature of the debate has been the anxiety expressed by hon. Members from all parties about the Government's policy. In particular, I must mention three speeches by Conservative Members. I refer to the speeches of the right hon. Member for Taunton (Mr. du Cann), the right hon. and learned Member for Hexham (Mr. Rippon) and the right hon. Member for Worthing (Mr. Higgins). The right hon. Member for

Worthing made some important remarks about pay policy and about pay projections in relation to public expenditure. I hope that the Government will take heed of them. He also spoke about interest rates, together with the right hon. and learned Member for Hexham. That topic has been under-estimated. The right hon. and learned Member for Hexham said that unemployment was unacceptably high. He spoke about the problem of two nations.
Speaking as one who is not a member of the Select Committee, I notice that supporters and opponents of the Government's economic policy have combined to throw grave doubt not only on the Government's objectives but on the assumptions behind their economic policy. Perhaps I can return the compliment. Had the same Committee examined the assumptions of a Labour Government and Chancellor it might have come to similar conclusions. The Committee propose to examine the link between the public sector borrowing requirement, the money supply, inflation and growth. I should be surprised if it came up with any firm conclusions.
One thing is clear. We are living in an era in which assumptions are being challenged. Long-cherished techniques of economic management are being discarded. I accept that faith in established Keynesian economics has been shaken. High levels of unemployment, and their tendency to grow, mean that in purely Keynesian terms the Government have an inescapable duty—if we are to get the unemployed back to work—to prime the pump, to unbalance the Budget and to print money. Dare the Government do that? Few people would have the temerity to advocate such action at a time when inflation rates and interest rates are at record levels. Premature action to reflate the economy would not only fail to cure the disease; it would also kill the patient. We would have hvper-inflation. At best, we might suffer the experiences of South America, and at worst those of Germany in the pre-war years, particularly the early 1920s.
In the current debate on economic policy, two important facts have been insufficiently understood. The Select Committee has commented on one of them. It has pointed out that Britain has a petrocurrency. The second important


fact concerns the cost of interest payments in our public expenditure. I venture to say that those payments represent almost the largest social service in Britain.
The currency problem has arisen because Britain has become a major oil producer. Not only does that provide the Government with a major source of revenue; the amount of foreign currency needed to pay for imported oil is rapidly falling. We also enjoy growing petroleum exports. They, in turn, bring in foreign currency. The technical position of the pound has been transformed. The pound can now perform safely as a reserve currency. It could not do that during the period of post-war Labour and Conservative Governments. Thus—this point has escaped attention—irrespective of the internal health of the British economy and of our high inflation rate, foreign funds are now seeking a sterling home. The exchange rate has climbed inexorably during the past three years, under both Labour and Conservative Governments. It is likely to climb still further. That process has continued despite the liberalisation of foreign exchange, undertaken by this Government.
The second special feature is that of very high interest rates. As a result of those rates, the pound has become even stronger. As some of my hon. Friends have said, that is a mixed blessing. It also places a heavy burden on public expenditure, which is far greater than people imagine. According to the Government's Blue Book, interest payments are currently running at about £10,000 million per annum. That is a figure as great as, if not greater than, the public sector borrowing requirement. Incidentally, it seems that £2,000 million of that amount is directly due to recent higher Government borrowing and rising interest rates since the oil crises of 1973 and 1978.
I imagine that most, if not all, of this vast total of interest has to be financed by taxation. If it is not financed by taxation it has to be financed by still further borrowing. I cannot believe that that is a healthy condition for the British economy. It encourages Governments to wish to see more inflation to lessen the burden of debt.
Therefore, provided that we practise

prudent demand management—this is a criticism of the Government's policy—that is, that the Government now eschew too drastic a policy of tax cuts and do not abandon incomes policy, we have for the first time the option, because sterling is so strong, to move for a drastic cut in interest rates. That was the point that the right hon. and learned Member for Hexham was also trying to make. I am convinced that that is not only the right but is a feasible policy for the country to adopt at this time.
The consequences of high interest rates are serious. The Government, in their economic stategy, are on their own admission relying on private industry rather than on public expenditure to stimulate employment and economic activity, but high interest rates militate against that policy. They increase the cost of public expenditure. Incidentally, I would mention the special problem that arises here with inflation-proof funded pensions. I think that the hon. Member for Horsham and Crawley (Mr. Horden), speaking in a debate on transport finances, pointed out the seriousness of that burden. High interest rates also discourage private investment. Who can make a profit at 20 per cent. interest rates?
High interest rates with an over-strong exchange rate must inevitably stimulate overseas rather than home investment. They have the effect of driving British investment abroad. Some of it may be desirable, but we also forgo employment at home. Such a policy can be carried to excess.
The history of the 1970s has been one of high foreign borrowing by this country to finance private motoring and some public expenditure. Today we are paying the price, and it is a very high one. If the Government wish to cut public expenditure, surely they should begin at this point. Lower interest rates cannot but help to have a buoyant effect on the economy. Surely it is within our power to achieve them.

Mr. Anthony Beaumont-Dark: I should like to make a few comments, not as a member of the Treasury and Civil Service Select Committee, but as a Member of the House, about what Governments can and cannot do. As my right hon. and learned


Friend the Member for Hexham (Mr. Rippon) said, unemployment is unacceptable. The implication is that the Government can sit round a Cabinet table, or we can sit here in this honourable House, and decide that 300,000 or 400,000 jobs can be created. Clearly, they cannot.
As I am so new to this House, but not new to what goes on outside, perhaps I might make a few realistic comments about the business man. As a rule, looking at all Government interference, whether Conservative or Socialist Governments, all the help that Governments have given whether by IDCs or grants to encourage industry to go up North, to go to Scotland, to leave Birmingham and go to Wales, has usually ended up as wasted money. Government interference usually leads to chaos. Industry needs Governments not to keep changing their policies, but to do well what they should and can do.
The Government can do two things. They can be consistent about not printing money that has not been earned, because that is what causes inflation, and they can help industry by having a sensible policy on pay and the size of the Civil Service. My right hon. Friend the Member for Taunton (Mr. du Cann) and my hon. Friend the Member for Ludlow (Mr. Cockeram) spelt out the figures. We employ about 2 million more civil servants than France, and Germany, which is a third larger than the United Kingdom, employs 1½ million fewer than we do. It is not that we spend too much on public service; we spend too much on administering that service and the distortions that it causes in private industry.
What do we end up doing when we talk about a wages policy? Many so-called good Conservatives say " We need a wages policy of 5 per cent. or a nil increase ". We are now suffering because we had a wages freeze. I am sure that Professor Clegg is an honourable and sensible man, but what he has been asked to do and is doing is insane. There is no such thing as comparability for the job. Every time we freeze wages, some silly person says " Let Professor Clegg or someone like him judge one job against another". A job can be judged only by the market.
Whether it be this or the previous Labour Government's plans, I can tell

the unions how they can get employment to go to the North of England. It is not hard. The thing to do is to have a sensible basis for wages paid in the South and in the North. There is not a comparability of expenditure. A house in the North of England which costs £10,000 will probably cost £30,000 in the South. But no one then says " What about comparability? " because comparability does not seem to work from a union point of view at that time.
If we are unable to be genuine and hope that employment will go where it is most wanted, it has to be because it is profitable for an industry to move. The reasons for distortions in employment lie not the problems of transportation, but in the distortions that successive Governments, with good intentions, build in.
I believe that the Government are right to be vague in the White Paper about how they see the next three or four years. One of the great problems of past White Papers has been that all the wonderful plans that have been laid out—the visions of what will happen always being good, particularly when elections are near—have been based on hope, and hope rarely materialises. What happens is that the income does not come in, but the expenditure still ploughs on. What the Government are trying to do—and I believe that they are right to do it—is to get the income in before spending it. When we see the oil money come in—it may turn out to be the greatest bonanza that we have ever had and we hope that it will be good as well as a soporific for us—we can start to spend it. That will be a good thing for the Government to do.
For too many years we have sacrificed the long term for the short term. I believe that the long term has finally arrived. This Government—any Government—had to do something about the financial situation that we faced. I believe that these plans are as realistic as it is reasonable for them to be.
The Government's task is to lay down guidelines and to lead. That often means that is it is necessary for the people to change their attitudes on what they wish for their country. Governments usually create chaos. They do not usually lead. They often insist on being the benign State leader. They favour the womb-to the-tomb philosophy. They believe that they can do for people that which they


cannot. Governments are usually fraudulent with people, because they offer a vision that they cannot meet.
If the Government lead and the people do not wish to follow—if they do not want to have a free economy, if they do not wish to have a prosperous country without inflation and if they do not wish to kill inflation—the Government cannot do very much. Government cannot be a dictatorship. If the unions will not co-operate in reducing wage demands that have not been earned, if civil servants insist on going way above what has been earned, if bank clerks insist on 22 per cent. from profits which they have not earned and which have been obtained because of the nation's problems, and if everyone insists on going ahead with inflation, Britain will have no genuine economic base in future, and within five years we shall have inflation of 30, 40, or even 50 per cent.
For the reasons that I have described, the policy that is being offered to us is sound. It is meant to be, not strength through misery, but strength through realism. It is the first plan to be introduced honestly by a Government who have some hope of success. However, they will be successful only if the people want to follow them. If they do net wish to do that, all that follows will be economic mayhem.

Mr. Giles Radke: I, too congratulate the Select Committee on the work that it has done. I congratulate it on the broad advice that it has received and on the report that it has produced. More important than the advice and the report has been the Committee's hearings. I have found them to be extremely instructive. I agree with the Committee that it has not been given enough information. Some information has to remain confidential, but I cannot always think what that information is. There have been some improvements in recent years in the information contained in White Papers. The presentation of the White Paper that is now before us, which includes taxation and public expenditure, is a useful improvement.
There are some wide gaps in the White Paper. Attention has already been drawn to some of them. The consequences of the cuts in housing expenditure are not included. It does not deal

with the turn-round in the finances of the nationalised industries. That is likely to mean increased charges, which will have their impact on inflation. We are faced with the problem of North Sea oil. The Government's estimates are conservative. Phillips and Drew has said that the Government's estimate is about £3½ billion too small. That means that the Government have a useful card up their sleeve. That may be their reason for wishing to make a conservative estimate.
The forecast for unemployment is set very low at 1·8 million. It is said that that is not a forecast but an assumption. All the advisers that have appeared before the Select Committee have said that unemployment will be far worse. The Treasury should publish all the forecasts that it has made. We all know that it has made a number of different forecasts of unemployment on a number of different occasions. The publication of its forecasts would not commit it to any one forecast. At present it is committed to unemployment of 1·8 million, and if it goes higher it will have failed. It would be much easier for us if we had the range of Treasury forecasts. The Treasury increases speculation by not publishing them. It would be a good thing if it published more information on unemployment. It is not good enough for the Chancellor, for example, to read to the Committee a rather pompous lecture on confidentiality.
The Treasury must come to terms with the new regime. It must accept that we have the new Select Committees. Indeed, the procedures of the House may have to come to terms with that fact. It may be that one day will be set aside for Select Committee reports. If that is done, more hon. Members may attend debates on economic matters. We must all—that includes the Chancellor—come to terms with the existence of the new Select Committees.
I direct my remarks to Tory strategy, which in a sense we have all been assuming. It is something that we should tackle in this debate and in tomorrow's debate. I sec the two debates running into each other.
The Government believe that strict control of the money supply and cuts in public expenditure will eventually lead to a reduction in interest rates, a reduc


tion in inflation, from 1982 a mysterious and substantial reduction in tax, an increase in output, and an increase in economic growth. That is what they believe will happen.
The great problem for the Government and for us all is how we get from now—now is an inflation rate of 20 per cent., unemployment high and rising, a stagnant economy with a decline in output and high interest rates—to the sunny uplands of the future as seen by the Treasury. There are three big question marks hanging over Conservative strategy. First, will that strategy reduce the level of inflation? Secondly, what will it do to British industry in the meantime? Thirdly—this is an important question for those who represent constituencies in development areas—what will be the impact on areas of high employment such as Merseyside, the North, Scotland and Wales?
I shall concentrate on the third question, but I shall make some brief remarks about questions one and two. First, I question very much whether control of public expenditure, cuts in public expenditure and control of the money supply will lead to reduced inflation. The behaviour of wage bargainers, among other factors, is extremely important. It is significant that we have seen earnings increase over the past year or so without an incomes policy. It is significant that the cold realities of public sector wage determination have triumphed over cash limits. We cannot proceed to reduce inflation without having an incomes policy.
The next question is the fate of British industry. The Select Committee is right to draw attention to what will happen over the next two years. The Treasury admits that in 1980 there will be a 4½ per cent. decline in manufacturing industry output and an average ½ per cent. decline over each of the three following years. As my right hon. Friend the Member for Leeds, East (Mr. Healey) said, that could be much worse.
High interest rates, high exchange rates, high inflation rates and a depressed market do not form the best environment in which to create the regeneration and the recovery of British industry that we all want. My theory is that by 1982 British industry will be almost on its knees and

in condition to respond either to the upturn in world markets, which may occur, or to an internal consumption boom, which might occur because of tax cuts. By 1982–83 we could be in the middle of a balance of payments crisis, despite having the help of North Sea oil at its most full. That is my worry about industry.
I turn, finally, to the high unemployment in the regions. The general level of unemployment is likely to be high, but those of us who represent constituencies in the regions know that most of that unemployment will be concentrated in a few areas. We already know that there is an unemployment gap between the Northern region and the South and the situation is deteriorating very quickly.
To illustrate the point, I quote a few figures. In November, unemployment totalled 109,000 in the Northern region. By December it had reached 111,000. In January it was 114,800; in February 119,000; in March 121,000; and in April 126,000. If we compare March 1979 with March 1980, we see that there was a 30 per cent. drop in the number of vacancies. At the Newcastle jobcentre, which I visited a few weeks ago, the notice board has been taken away because there are no vacancies to put on that board.
Let us look at the unemployment flow. In the first four months of the year there is usually a decline in unemployment at the rate of 3,000 to 4,000 a month. Exactly the opposite is occurring at present. There is an increase of 3,000 to 4,000. Every hon. Member who represents this kind of constituency knows that there will be new redundancies every week.
I am fortunate in having Washington new town in my constituency. That new town was a joint party effort—it was Lord Hailsham's idea, and he was backed by the incoming Labour Government of 1964. The town was described as " the jewel in the Northern crown ". Certainly its balanced industrial structure enabled it to weather the storms of the 1970s. However, in almost every week over the past two months redundancies have been announced in that area.
It is against that background that we must judge the spending cuts. There will be cuts of almost 100 per cent. in the


general and industrial support programme. There will be substantial spending cuts in employment creation and training. All those cuts have been announced in the White Paper. I do not pretend that Government support will solve all our regional problems or that regional policy by itself is enough. Nor do I believe that the regional or industrial policies of the Labour Government were satisfactory. But at a time when unemployment is rising very quickly and Government support is most needed, it is suicidal to cut back as this Government are doing.
Whenever we mention regional unemployment the eyes of Conservative Members tend to glaze over. Secretly they feel that as they did not get much support in those areas in the general election, they can probably get by next time without that support. They feel that they need not bother to do anything about the problems, and that they can still win elections, even if there is high unemployment in the North of England.
I believe that the Government ignore the problems of the North at their peril. They forget that there is a significant difference between the 1930s and the present. In the 1930s there was no television and people in the South did not know what was happening in the North. Today they know. They know that firms are going under and unemployment is rising month by month in the regions. They know when they see the fate of young people in places such as Newcastle, Sunderland and Durham. They know the desperate plight of towns such as Consett, which is about to be destroyed, and they see the decline in social morale and the gradual breakdown in the social fabric. When they see all these things the British people will reject the approach of the hard-faced men on the Treasury Bench and turn to a different approach. Every Government have their Achilles' heel and I believe that unemployment, particularly regional unemployment, will be this Government's Achilles' heel.

Mr. Nigel Forman: I wish to follow two aspects of the remarks of the hon. Member for Chester-le-Street (Mr. Radice) because I believe that he

has touched on some important matters. The first aspect is the considerable power of the public sector trade unions. That fact alone goes a long way towards explaining the dilemma that was mentioned earlier in the debate—why successive Governments of both parties have found it so difficult to restrain and contain current public spending but relatively easy to defer capital spending.
Secondly, the House would do well to pay close attention to what the hon. Member said about the local effects of national policy, whichever Government are in power. That is especially so when it relates to the large regions—too large in my opinion—of the North and West of the country, which tend, in every recession, to suffer the worst effects of deflationary policies.
One can have long arguments about whether the deflationary policy of a particular Government is right, or whether it should be stronger or weaker. However, one thing is certain. Not all Conservative Members' eyes glaze over when the subject of unemployment is mentioned. I believe that it is principally up to the employees and managements of the undertakings concerned, whether they are in the public or private sector, to mitigate and reduce the tragic consequences of the deflationary policies—particularly unemployment. They can best do that by adjusting more speedily and readily to the new and rather grim realities of the world of low or nil growth.
This all takes me fairly logically to the main burden of my remarks. The most significant thing about the White Paper is the context of virtually nil growth that is forecast over the entire period ahead—possibly the whole period of this Parliament. Obviously this has implications for overall public spending, especially if the Government at the same time want to reduce public borrowing, which is clearly too high, and further reduce direct taxation, to which we are still committed.
Furthermore, it is not really an option for the Government to increase indirect taxation as one way out of the box in which we find ourselves because of the inevitable impact on the retail price index. The same sort of argument would apply to those who seek to be more lax with public borrowing because of the im


pact on interese rates and the so-called " crowding out " phenomenon.
If we take all those points as given, we will conclude that as long as the economic growth to which we had become accustomed in the 25 or 30 years before 1973 is no longer available, public spending should not be allowed to grow at all. That is not to say that certain components of public spending cannot grow and should not grow within the overall total. We see that reflected in the Government's public expenditure plans, where they seek to increase quite remarkably spending on defence, law and order, and one or two other things. But inevitably that means bigger reductions elsewhere to compensate for the increases in these programmes.
In that respect, whatever one's views about social justice and transfer payments, it is unavoidable that the social security budget should also be included in the process of economy. It also implies the need for greater efficiency and productivity in the public sector. That has been said by a number of my hon. Friends, although it has also been well said previously in debate that this cannot be done solely by cutting out waste and inefficiency. Indeed, if there was one exaggeration of which my party was, perhaps, unwittingly guilty in the months leading up to the last general election, it was the impression that was left that somehow one could make the sort of economies in public spending that we want to make merely by reducing waste and inefficiency.
Quite clearly, we must look to the possibility of redefining the borders between the public and private sectors and of cutting out certain public functions altogether, as my hon. Friend the Member for Ludlow (Mr. Cockerham) has already said.
In that context, I believe that the key questions that must be asked when we are discussing public expenditure are the questions alluded to by the Chancellor of the Exchequer in his Budget speech—and I remind the House of the two that I have in mind. First, which services are both central Government and local government best able and best fitted to provide? Secondly, where can the role of the State sensibly be reduced? It seems

to me that we must come up with answers to those two questions in order reliably to reduce public spending without doing excessive damage in the process.
The answers that I would give are, obviously, that in the first place we must provide adequately for defence. I am delighted to see in the White Paper that this is scheduled to grow by 3 per cent. a year in real terms up to the end of the survey period. The same consideration applies to law and order, in my view, and again I am pleased to see the scheduled growth of 2½ per cent. a year. Once again, the same consideration applies to expenditure on health nationally, which is scheduled to grow by 2 per cent. a year.
However, it is when we turn to the vast spending on social security, in a country with an increasingly large ageing population, and at a time of high unemployment, that one has some most serious worries. I understand from the White Paper that about £20 billion, or one-quarter of total public spending, is now accounted for broadly under these headings, and that this has grown by about 50 per cent. in the last 10 years, as compared with an increase of only 15 per cent. in gross domestic product over the same period. This relationship cannot continue and could not have continued under any Government, whichever party had won the last election in May 1979.
This suggests to me that the Chancellor was absolutely right to make the point in his Budget speech about the need to reconcile the need, on the one hand, to protect the most vulnerable members of society with, on the other hand, the need to ensure that scarce resources are distributed in a way that does not unduly prohibit the creation of wealth. I believe that in the long term the way for us to do that very delicate balancing act is by revising and eventually implementing our commitment to the tax credit scheme. I am strongly in favour of that scheme.
I hope that my hon. and learned Friend the Minister of State, Treasury, will note this point, because I believe that the Government owe it not only to their supporters but to the country to complete their investigations into this important project We already have some


of the building blocks for the tax credit scheme with the child benefit that we have in place and with the recent decision of the Government to tax short-term benefits.
I realise the arguments that there are against the tax credit scheme. It may be initially expensive to raise the thresholds, but I suggest that it need not be so if we abandon the 1972 commitment, which is now quite unrealistic in any case, to leave no one worse off when we make the change. It may be initially complicated with the parallel development of computerisation in the Inland Revenue, but I suggest that this need not pose an insuperable obstacle if there is sufficient political will.
On the point of political will, I remind my Front Bench of our party manifesto pledge. I am not one of those who believe in the mandate theory of Government—but sometimes it is convenient to cite these theories against one's hon. Friends when they seem to be departing from the Ark of the Covenant. In our manifesto we said:
 We shall wish to move towards the fulfilment of our original tax credit objectives as and when resources become available.
That seems a sensible position to take.
My only difference with the Government Front Bench is that I should like us to fulfil that pledge sooner rather than later, if necessary at the expense of other programmes, not least—here is the important point in relation to the Select Committee's examination of public service manpower—because it could lead to some huge reductions in DHSS staff, and we could effect many of our social policies via the auspices of the Inland Revenue thereby winding down a great deal of the already overmanned DHSS.
My conclusion, therefore, Mr. Deputy Speaker—I warn you that it may be a lengthy one—is that any policy on public spending must reflect the new requirements of the world of low or nil growth, to which the Red Book drew attention on pages 17 and 18. It must take full account, equally, of the impact of the relative price effect and, therefore, deal more effectively than the Government have so far shown signs of doing with the problems of public sector manpower and public sector pay.
In this connection I agree entirely—I could not put it better myself—with paragraph 19 of the Select Committee's report, which says:
 We are not convinced that cash limits are fully effective in controlling public sector pay.
Neither am I, and I suggest that the Government need to look to additional mechanisms for that purpose.
Equally, any decisions on public sector expenditure must reflect and will inevitably reflect our own political priorities as a Government. In other words, we have the priorities, as we all know, of defence, law and order, the Health Service, and the safety net principle in social security spending. We must eschew temptations to starve our public services for the sake of imprudent tax cuts that might be financed by the so-called fiscal adjustment of North Sea oil revenues towards the end of this Parliament. Equally, we must eschew the temptation to which the Labour Party might have succumbed if it had been in power, of trying to buy jobs and votes with a reckless expansion of the public sector in areas in which tradeable goods and services are not involved.
We on the Conservative Benches also need to recognise the vital relationship between the State as procurer of goods and services—to the tune of about £20 billion, these days—and the private sector as the main provider of those same goods and services. This is a point that the Prime Minister recognised not long ago in her speech during the debate on the motion of no confidem e, and I very much hope that the Minister who winds up this debate will be able to say something further about the Government's policy on public sector procurement, because at a time of deep recession it can not only create jobs but reinvigorate the economy.
My last remark, Mr Deputy Speaker—I warned you that it would be a lengthy conclusion—is that I believe that for the rest of this Parliament and possibly beyond, we in this country and, indeed, others elsewhere in the developed world, will need to learn how to do more with less—to put it in a slogan. I believe that to be the meaning of a future for the OECD countries based on true economy, and it is a future that we in this country could and should pioneer. I only hope that we have the political courage and imagination to make the necessary effort.

Mr. Robin F. Cook: I hope that the hon. Member for Carshalton (Mr. Forman) will acquit me of discourtesy if I do not immediately take up his remarks, although I shall be taking up some of them during my speech. I am aware that some of my colleagues wish to intervene in the debate, and I can see that the Conservative Benches have now found a further speaker. I shall, therefore, seek to be as brief as I reasonably can.
I should like to begin by going back to the speech of the right hon. Member for Taunton (Mr. du Cann). I am sorry that he is not in his place now. I make no complaint about that because he has been assidous in his attendance throughout the debate. I thought that the right hon. Gentleman's speech was remarkable. In the course of it, he made trenchant observations in which he cirticised the unemployment projections in the Government's policy as unrealistic and criticised their projected decline in output of 6 per cent. as being far too optimistic. He criticised the turnround in the external financial limits of the nationalised industries as hopelessly unrealistic, he criticised their failure to contain increases in public sector wage demands for the current year, and he made an especially vigorous onslaught on the way in which the Government have loaded the cuts on to capital rather than revenue expenditure.
If I were the Chancellor I should be inclined to say " If this is the right hon. Gentleman supporting my policy, I should not like to hear him criticise it." It makes it plain why the Chancellor did not stay to hear one word of what the right hon. Gentleman said in the debate—nor, indeed, that of any other speaker.
The right hon. Gentleman then went on—at this point I diverge from him—to attack the level of public service manpower and the rate of pay which they receive. The theme was taken up by a number of his colleagues on the Government benches.
No member of the Opposition would quarrel with the statement that we must stringently apply cost-effective, cost-benefit techniques to the use of public sector manpower. However, Government supporters really must not fall into the temp

tation of deluding the public that there are easy and substantial savings to be made in public expenditure by cutting out bureaucracy. There was a tart passage by the Chancellor in his Budget Statement in which he addressed himself to exactly that view. He pointed out that the total cost of public sector manpower was one-fifteenth of the total amount of public expenditure. Even if one achieves a truly dramatic cut in the level of that manpower, one will achieve probably about 1 per cent. to 2 per cent. of total public expenditure. If one wants to achieve the savings which Government supporters assure us they do, there is no way that one will achieve them by cutting out bureaucracy and reducing manpower. One must cut services. That is what we have seen happening as a result of some of the cuts that have occurred so far and what we shall see happen again under this White Paper.
Every Member of Parliament has been sent the statement by the Association of Directors of Social Work on the effect of public expenditure cuts on social workers' activities. In the course of that paper the directors estimate that this year social work authorities will complete 55 to 60 buildings which they will be unable to use because of manpower constraints. We are talking about 55 children's homes, 55 old folks' homes or 55 day care centres which, when completed, will stand empty like some kind of symbolic Centre Point of the public services.
It cannot be argued that we are already over-provided with such facilities. That cannot be argued by the Government because the previous Tory Government set standards for such provision. The standards they set were as follows: for mentally handicapped children, four places in homes for every 10,000 of the appropriate population. In fact, there are not four at present; there are two. It laid down that we should have six places in day care centres for the mentally ill. We do not have six. In fact, we have one. We should have 12 home helps per 1,000 of the elderly. We do not have 12. In fact, we have six.
Those figures were not dreamed up by the directors of social work. They were prepared by the previous Conservative Government on the initiative, of all


people, of the present Secretary of State for Industry. Plainly we are failing to meet those targets. The policy being pursued by the Government on public expenditure will make it much more difficult to achieve those targets.
Of course, as the hon. Member for Carshalton (Mr. Forman) said, the Government are not cutting every service. The law and order services are to be retained. I make no complaint about that. One is grateful for the bright spots among the general retrenchment which is Government policy. However, I am struck by the partial view which the Government appear to take of law and order. Tomorrow we shall debate the Finance Bill. It will become a law, sad to relate. It will have the full force of any statute passed by this House. The enforcement of that law will not be easy. Already some of the brightest brains in Britain will be working in some of the most expensive offices calculating how they can avoid and evade the provisions of that statute. Yet at this same time the Government are cutting back on 2,000 posts within the tax inspectorate. One is driven to conclude that white collar crime and fiddling income tax do not attract the same opprobrium as other breaches of law and order.
Even more serious is the Government's attitude towards the enforcement of the safety laws. In 1974 this House passed the Health and Safety at Work etc, Act. That was the first Second Reading debate in which I sought to take part— unsuccessfully, as it turned out. That legislation had all-party support. The Opposition did not then seek to oppose it. That Act set up the Health and Safety Executive to enforce and police its provisions. The Health and Safely Executive was told last month that it must cut its staff by 6 per cent. That is not a cut in bureaucrats or administrators. That is a cut in field inspectors, who are there to police and enforce a law passed by this House.
The economically active population of Britain have a much greater chance of being maimed at work than they have of being mugged in the streets on their way home after dark. Yet we are cutting back on the enforcement of our safety laws. Are we saying that we are so poor that we cannot now afford to enforce the minimum legislation on safety passed by

Parliament or that we do not regard that as a function of law and order?
There are other contradictions in Government policy. I draw the attention of the House to the number of cuts imposed by the Government which will make it much more difficult for British industry to compete with its competitors abroad. The Government are not removing from British industry a burden of public expenditure which will enable it to compete. In many cases we are kicking away from beneath British industry the support that it obtained previously from public expenditure.
In export promotion there will be a loss of 100 posts. I cannot imagine that any Member of Parliament who believes at present that we are doing adequately in the export markets of the world would agree that we could lightly afford to throw aside 100 members of Government staff seeking to increase those exports.
The CBI is no strong supporter of public expenditure. However, it calculates that every pound spent by the Government on export promotion results in £20-worth of export orders for firms in London alone.
The Government propose a cut of 15 per cent. in industrial research establishments. Among the projects that I understand will be cut as a result are research into computer development, research into new machine tools and research into alternative energy sources. These are exactly the areas in which we should invest more money if we want to compete successfully in the next decade.
The Chancellor of the Exchequer told us rather gleefully at the end of last year that in 1980 there would be a record number of bankruptcies. He said that the nation must learn that bankruptcies can be healthy. The House would be divided on that view of bankruptcies. However, if indeed the Chancellor expects more bankruptcies this year than ever before, why is it that his colleague the Secretary of State for Trade chooses this of all moments to wind up the bankruptcy service provided by the Department of Trade, which assists private companies in sorting out the legal and financial tangles that arise from bankruptcy? Nowhere do we see more clearly that the consequences of public expenditure cuts will be to reduce


support to industry than in table 1.4 of the White Paper, which refers to the turnround in the net borrowing of the public sector industries. A number of hon. Members have already drawn attention to this table and pointed out the extraordinary transformation of nationalised industries, finance which it presumes. Within five years they are to move from a net borrowing of £2,300 million to net repayment of £400 million. That is a turnround of £3 billion. Members of the transport Select Committee inquired closely of the Parliamentary Secretary—

Mr. Eggar: On a point of order, Mr. Deputy Speaker. Is it in order for an hon. Member to refer on the Floor of the House to the proceedings of a Select Committee before it has reported?

Mr. Deputy Speaker (Mr. Richard Crawshaw): I understand that this evidence is in booklets that have been published. Therefore, it is in order.

Mr. Cook: The Select Committee took evidence from the permanent secretary. My colleagues and I pressed him closely on how the British Rail component had been made up for insertion in the table. Table 1.4 consists of figures written down on paper. It is pointless to discuss whether they are projections, assumptions or targets. They are merely figures written down on paper with no serious analysis under-pinning them, with no serious attempt to work out in detail how they are arrived at.
All that comes out forcefully from that paragraph in the White Paper is that the bulk of the transformation is to be achieved by added charges. The White Paper is explicit about that. It says that the increase in the repayment of the nationalised industries and the cut in their borrowing powers assume that the gas and electricity industries will be taking steps to eliminate under-pricing over the period. Not many of our constituents would agree that gas and electricity are under-priced. Not even the gas and electricity industries would agree. They will be expected to make major increases in their prices and profits to achieve the figures in the table, if they can be achieved at all.
It is coming home to an increasing number of members of the public that, when the Government talk about public expenditure savings, they are effectively talking about increases in public service charges. Several hon. Members have referred to the substantial cut in housing expenditure. The hon. Member for Dundee, East (Mr. Wilson) wanted to know why housing had been singled out for a particularly savage cut. I can tell him. It is because expenditure on rents can be passed on more easily than can expenditure on other sectors to which he referred by comparison. That cut presupposes that there will be a substantial increase in real terms in the rents of public sector houses.

Mr. Nick Budgen: Is the hon. Gentleman clear about that? We have no evidence yet whether the Government intend to increase rents or whether public housing will grind to a halt. There might be a very much stronger case if the Government had explained in more detail their proposals for public housing.

Mr. Cook: I should not object to the Government's explaining in more detail what they propose to do. We cannot make perceptive comments on the Government's proposals unless we have more details. I cannot claim any expertise on housing in England and Wales, but in Scotland it will mean more than a total grinding to a halt of the public sector housing programme. Even taking all the capital expenditure on housing in Scotland, we still do not arrive at the proposed saving. Even if no council houses were built and no council houses were modernised, rents would still have to be increased in real terms to achieve the gargantuan saving which the White Paper forecasts.
The Government's strategy depends critically on increasing charges for public sector products and services. That is a curious approach, and it is possible to represent those increased charges as savings only because of the accounting conventions for public expenditure. By increasing charges we do not necessarily reduce the consumption by volume of goods and services by the public sector. What happens is that the way in which it is paid for is shifted, and the burden of paying for it is shifted to those who use


the highest proportion of their income to pay for transport and housing; in other words, the burden is shifted to the poor.
It is not part of an economic strategy; it is part of a social strategy designed to redistribute income from the poor to the wealthy. The attempt to dress it up as an economic strategy is farcical. The theory runs like this. If we punch a great hole in the economy by cutting the public sector, the private sector will expand to fill that hole. Where is the sign that the private sector will expand to fill the hole? Investment will not fill it; it is falling. Exports will not fill it; they are falling. The Red Book assumes that exports will fall still further and makes no proposal to arrest that trend. The hole will not be filled by the private sector, and the GDP is likely to decline more or less by the amount by which the demand for goods and services in the public sector declines.
This raises the intriguing question: when there is so obviously little reason to underpin the strategy put forward by the Government of cutting public expenditure to stimulate the economy, why has this strategy such a psychological appeal to a large chunk of the population? It is not difficult for someone who has been brought up in the Church of Calvin to answer that question. We are witnessing an appeal to the puritan ethic; by suffering we achieve salvation. If we indulge in the flagellation of the public sector we shall end up with economic re-birth. There is not a shred of reason to support that article of faith, and the sooner we bring the Government Benches to a healthier view of the role of public expenditure in an advanced industrialised economy, the better it will be for Britain.

Mr, Tim Eggar: I start by commenting on the initial point made by the hon. Member for Edinburgh, Central (Mr. Cook) in his fine speech. Few of my hon. Friends believe that the necessary public expenditure restrictions can be brought about either by a reduction in public sector manpower or by reducing the relatively high wages in the public sector. The attempts that we make to control expenditure on public sector manpower are an earnest of the Government's intention to get public expenditure under control. We go further. We say

that unless we can control public sector wages, the spill-over etfect on the private sector will undermine our economic policy, and that goes for all of us, however, monetarist we may claim to be.
Few of my hon. Friends have fundamental doubts about the aim of this public expenditure White Paper. Some say that the Government have not gone far enough; others say that they have cut too much in one area or too little in another; but few challenge the Government's basic hypothesis that economic growth can be achieved only by reducing the proportion of national wealth that is spent on our behalf by the Government.
The Treasury team is rightly sceptical about economic forecasts. We all recognise that the future course of the economy is strongly influenced by events that the Government cannot control. The level of world trade is one example. Private sector investment is another. I understand the Treasury's reluctance to make a series of detailed forecasts. It prefers to make what it calls assumptions about the few variables that it believes it can control. Even then it gives scant information about public expenditure projections three or four years ahead, and is reluctant to give us a breakdown by economic category.
At the same time that Ministers are unwilling to give us information, they are at pains to explain that their economic policy will take five to 10 years to achieve fruition, and I agree. It will not work overnight. They must therefore not be surprised when those who wish to analyse in the medium term what that policy will do to our economy make criticisms which they believe are unjustifiable or unfair. The Treasury must accept that its reluctance to give information will lead to criticisms that may prove to be unfounded, but Ministers are unwilling to give the detailed rebuttals that are essential.
Apart from the squeeze on the corporate sector, which concerns me greatly, but on which I shall not comment tonight, two aspects of the White Paper worry me. I hope that the House will forgive me if I follow the remarks of other hon. Members on the Treasury Select Committee. The Select Committee has reached unanimous views across party boundaries


on many salient aspects of the public expenditure White Paper.
My first concern is with the way in which capital expenditure has been drastically reduced while current expenditure, particularly the wages bill, has taken up the slack by the reductions. I recognise that for years White Papers, of both Governments, have been guilty of saying that there will be more expenditure this year, but less in succeeding years, yet those succeeding years go ever further into the future. That same criticism can be made of this White Paper, but it is perhaps not quite so valid as in previous years.
All Governments have found it easier to reduce capital expenditure programmes than current expenditure. Unfortunately, this Government are no exception, despite the courageous efforts made to reduce the apparently inevitable growth in social services expenditure. Capital expenditure this year will be 40 per cent.—almost half—of what it was in 1974–75. One does not have to be a Keynesian to recognise the serious impact that a reduction on that scale has on private industry, particularly the heavy construction industry. We are nearly reaching the point where we have a net disinvestment in public infrastructure in this country. Whatever their political view, no one can welcome that.
I should gain more comfort if I were convinced that that was an essentially temporary point of the Government's strategy, and that they were making strong efforts over current expenditure, particularly the public sector wages bill. However despite extensive questioning, and the provision of written evidence to the Select Committee, the Treasury's explanation of pay rises given to the Government sector is far from convincing. One is forced to the conclusion that, using any reasonable definition, the 14 per cent. cash limit has been breached this year. Proving the contrary has tested even the Treasury's considerable intellectual powers of explanation and persuasion.
I support my right hon. Friend the Member for Taunton (Mr. du Cann) and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) in doubting whether a significant reduction in expenditure on public sector wages can be achieved without decisions about manpower levels being taken from the individual Depart

ments and given to the Civil Service Department. There is a case for saying that the CSD should be reincorporated into the Treasury. Even then, however, to achieve the necessary restrictions on manpower levels the Department would need to be assured of the complete and utter personal backing of my right hon. Friend the Prime Minister. Unless the Government move quickly in this direction we shall not achieve the public sector manpower reductions that we promised at the general election, and which the people expect from us.
My second worry has been a recurrent theme for members of the Treasury and Civil Service Committee. It concerns the Government's reliance on a miraculous transformation in the fortunes of the nationalised industries. Real increases in the cost of gas and electricity have already been announced. They are inevitable and totally justifiable. However, I hope that the Government are not relying on those sources for too much additional revenue. Apart from the inevitable effects on the retail price index, it would be most distressing if we went into the next general election with British Gas still fully in public ownership.
Even if we ignore the RPI effects of putting up the prices of the products of the more profitable nationalised industries, a more suspect and questionable policy is whether the Government can secure a £1 billion improvement in the finances of the loss-making nationalised industries. I find it difficult to believe that that could be achieved, and in that context I have only to think of British Rail.
In the scramble to achieve the financial targets of the nationalised industries there is a danger that too much reliance will be placed on Government control being exercised through tight cash limits. Those cash limits might be tailored with the needs of the PSBR more in mind than the needs of the individual industries. Large utilities, particularly profitable ones, all over the world rely to a large degree for their capital expenditure on external funding. There is some evidence that cash limits are already forcing some of the more profitable nationalised industries to take decisions which no private enterprise company in a similar position would ever take.
In particular, there is some evidence that the cash limits may force industries to postpone investment plans in a way that will seriously affect their future effectiveness. In other words, the same is happening in the nationalised industries as is happening with public sector infrastructure. I accept the need for central control of nationalised industry financing. There should be a limit to the amount of external finance available to the nationalised industries.
I believe that cash limits have brought a welcome financial discipline to the nationalised industries. I wonder whether it would be wise to consider separating nationalised industry borrowing for major new capital projects from the general cash limits. I believe, in any case, that cash limits would be better expressed as medium-term financial targets. If the normal cash limit is separated from funding available for expenditure on major capital projects, funds should be available to the Treasury. Nationalised industries could be asked to submit pro posais for funding on capital projects to the Treasury, and the Treasury would allocate funds for those purposes.
For certain capital projects the Treasury might say that it had not the funds available but that the nationalised industry concerned could go to financial sources in the private sector and borrow without a Government guarantee, either explicit or implicit. There is the example of BNOC. An advantage of this course is that capital expenditure, especially on major new, and what effectively may amount to infrastructure, investment is not sacrificed because of current expenditure pressures. Additionally, there would be a centralised Treasury control that could make judgments about the country's need for expenditure by the nationalised industries and give priority to those projects within the nationalised industries which the country feels should proceed.
I may have seemed overly critical of the Government. Everyone favours reductions in public expenditure until reductions affect him or his pet projects. It is easy to pick holes in any Government's public expenditure proposals. I hope that that has not appeared to be my major objective. I have tried to be constructive.

Mr. Michael English: I shall be brief, in order to allow other hon. Members to speak. This debate began with two right hon. Gentlemen making contrasting speeches. My right hon. Friend the Member for Leeds, East (Mr. Healey) was no more than just to himself when he said that he was talking about public expenditure. I do not believe that the Chancellor of the Exchequer was doing only that. He reached his lowest point when he made his slightly sarcastic remarks about the Select Committee.
I should like to state clearly that whatever the Treasury and Civil Service Committee may prove to be like in a few years' time, following a whole Parliament's experience of it, this debate is not unusual. The hon. Member for Canterbury (Mr. Crouch) was wrong in his point of order. I have personally done the first draft of six reports of the same character as that which we are discussing today with the public expenditure White Paper. The Financial Secretary to the Treasury, now sitting on the Government Front Bench, participated in the old Expenditure Committee in reports of the character that we are discussing.
Although the name—the Treasury and Civil Service Committee—is new, the principle of having a Select Committee report in time for this debate is not new.
The Chancellor damned the Committee with faint praise. Nothing will turn the right hon. and learned Gentleman into a great orator, but he would at least make his speeches more interesting if he did not constantly leak them to the press in advance through his PROs and junior Ministers. Almost every word hon. Members heard today we have read in the press over the weekend and last week. The right hon. and learned Gentleman spoke of how the Committee takes up time. The old Committee apparently never took up the time of anyone, but the present one does.
One of the most reprehensible things is the implication that the right hon. and learned Gentleman has been more forthcoming than his predecessor. I can only say, as the former Chairman of the General Sub-Committee of the Expenditure Committee, that my right hon. Friend the Member for Leeds, East, when he was Chancellor of the Exchequer, was


extremely helpful to me personally and to the Committee.
I turn to the substance. Every word in the report is agreed unanimously, although I should like to have seen other matters in the report. Perhaps we spent too much time talking about whether the Chancellor gives us information. There are few secrets about the economy—many uncertainties, but few secrets. If the Chancellor does not tell us what the rate of unemployment will be we ask our advisers. They use their models and computers and we are told that 2·5 million or 2·2 million people will be unemployed. We assume that the unemployment rate will be more than 2 million, and even the Chancellor now accepts that.
I am worried, not so much about the information that the Chancellor did not give to the Committee—although the press took up that—but also about the information that he did not seem to have. When we say, in the technical phrase, that there is no table of the effects of public expenditure by economic category, we mean not that the Chancellor did not provide the evidence but that it was not prepared. No blame attaches to the Treasury civil servants for that. They cannot prepare something on which decisions have not been taken.
If council houses are sold, amazingly, the receipt of capital assets is said to amount to a reduction in public expenditure. It would take too long to explain what an artificial concept that is. If the council houses are not built the subsidy that is not given is counted as a saving in public expenditure. If council rents are increased that is also said to be a saving in public expenditure.
All such activities have one effect, according to the public expenditure White Paper—they reduce public expenditure and contract the PSBR. That is fine, but in economic terms the meanings are different. For example, if one stops building council houses people in the construction industry are put out of work, but that does not happen when rents are increased. Rent increases do not put people out of work, but they increase the retail price index. Selling council houses does nothing; because it merely transfers assets from one person to another. It might achieve something socially, but

economically it achieves nothing. The Chancellor waved that argument away by referring us to the Secretary of State for the Environment.
But the Secretary of State for the Environment told another Select Committee that the local authorities must make the decisions. That is the first time that I have heard this Government, who are trying to impose tighter controls on local authorities, say that local authorities should be free to decide something. The truth is simply that the decisions have not been taken.
The nationalised industries are further examples. I was surprised to hear my hon. Friend the Member for Edinburgh, Central (Mr. Cook) say that British Rail told the Transport Select Committee that it must stop making any losses. The equivalent in road transport would be to make all roads toll roads. Some people might believe in market forces to such an extent that they would agree with that and with making all the motorways toll roads. They might believe in an equality between both forms of transport and that the track, in each case, should be paid for. We subsidise British Rail because the track is the equivalent of a road which is paid for out of taxation.
The Chancellor waves these realities away again. He says that each Select Committee must examine its own nationalised industries. There is no suggestion of a unified policy. That was so in the past; I do not blame the present Government, but Government in general are blamable for the fact that the nationalised industries have different forms of accounts. The Treasury never managed to knock their heads together. The industries that make a profit have one type of account and those that make a loss another. No multi-national company would allow its subsidiaries to account in different ways so that some of them put money away because they were making too much and others used the worst practices because they were making a loss. There is no unity in policy and no consideration of what is required by the market.
The Chancellor called my statement grotesque because I said that we were trying to create if not quite a candy-floss economy at least an economy in which more people sell imported candy-floss. What is the Chancellor trying to do? We appear to be trying to contract the


public sector as well as manufacturing industry. Whether the Chancellor is saying that he is trying to do that I know not but the effect is, as we have all heard, a colossal decline in manufacturing industry.
Yet we are told that in the latter years GNP will rise by 1 per cent. In that case it will rise in the private sector only. Private services only will increase. If that is not a sort of candy-floss economy I do not know what is. But, as I said, it cannot be a candy-floss economy.
The word " candy-floss " was put into my mind by a high ranking worker in the public sector. I do not think I should identify him in more detail than that. However, he was wrong. It will not be a candy-floss economy because candyfloss is manufactured and we are to have less manufacturing. We shall import our candy-floss.
We shall have more people in services such as distribution, banking, gambling, entertainment and television—there will be the second channel—and all these goodies will increase at the expense of the real wealth—creating agency of our country, namely manufacturing industry. They will also increase at the expense of public sector services.

Mr. Nick Budgen: I shall be brief because I have transgressed in the past by taking too much time. I shall be brief, most of all, because I know that there are two hon. Gentlemen who wish to offer their views to the House.
I agree with the hon. Member for Edinburgh, Central (Mr. Cook), who said that there is no opportunity for really massive cuts in public expenditure by axing the beaurocracy. It is right that the only real cuts in public expenditure that will be available over the next few years will be effected by increasing the cost of the various services.
I hope that the Government will offer their supporters rather more guidance about the effect of the retail price index. If we are a monetarist Administration, we should be looking not at the causes for individual price rises, but at the cause of inflation itself; that is to say, the reason why money is losing its value.
I find it somewhat strange when I hear explanations from the Government that,

for the sake of argument, over the last year or so the increase in the price of oil has been the cause of inflation. I would have thought that the present Administration had a cast-iron case for blaming the last Government for the way in which they increased the money supply in the period running up to the much-postponed general election.
I do not understand how a monetarist Administration can blame OPEC. Nor do I understand exactly how the effect of a high exchange rate—with its helpful effect upon, for instance, food prices that are not covered by the CAP—has an effect upon inflation. I see, of course, how it has an effect on the RPI.
I say that because I believe that a distinction should be made between the RPI and the going rate of inflation. I understand that it is the common view of the Government that anything affects the retail price index is, if possible, to be avoided. If I accept the argument of the hon. Member for Edinburgh, Central that the real savings in public expenditure are to be made by increasing charges, that must, inevitably, have an effect on the RPI. If we are confusing the RPI with the rate at which money loses its purchasing power, it seems to me that we are in a highly dangerous cleft stick.
I say a word or two about what I regard as the inadequate explanation that the Government have offered concerning their plans for public expenditure in the area of housing. Whether one turns to paragraph 11 of page 72 of the public expenditure White Paper, or to paragraph 18 of the report of the Select Committee, the issue is clouded with vagueness. Why is that? If the Government do not have the political courage to spell out the implications for housing of a £2·5 billion cut over four years, I do not see them dredging up the courage to do so later on as we get nearer to a general election. For the sake of argument, had we lost Southend rather than just won it, or if, as we are bound to do eventually, we lose a few by-elections, in two or three years' time I do not think that the detailed implications for housing that are set out in these projections will be all that easy to spell out. It would be very much better to spell them out now.
I believe that we have the political courage to do that now. I think that the hon. Member for Edinburgh, Central got


it right when he said that the Government are appealing to the Calvinistic streak in our people. But while that is a strong, important and honourable streak, it is not one that persists for ever. We tend to have a Calvinistic streak for a period perhaps, followed by a laxer cavalier streak. In my view, now is the time to appeal to the Calvinistic streak.
There are also important economic reasons. At present, in my opinion rightly, the Government are trying to encourage people to buy their council houses. That is taking place against a background of what, inevitably, seem to be continuing high interest rates for some time. We have what is generally admitted to be a rather over-high PSBR. If that is to be properly financed so as to keep to the monetary targets, and while I accept that interest rates will go down somewhat in the near future, interest rates will not be very low in the foreseeable future. Therefore, unless rents go up, the comparative advantage of home ownership will be less clearly felt by those who are currently living in local authority housing.
There is another argument. We all know that the construction industry is likely to go through a difficult period for the next couple of years. The construction and property industries always benefit from inflation. After all, it is those who borrow money against real assets who benefit from inflation, and the inflationary psychosis has taken over so strongly that, in general, people are borrowing more against the best possible real assets that they can find. Therefore, the construction industry will go through a difficult period.
Surely, at the least, the Government ought to try to explain to the construction industry what their views are in relation to public housing. If, for the sake of argument, the Government say " We shall not put up rents because we find that unacceptable "—I believe that is the modern term—" because of its effect on the RPI", the construction industry will know that if the projected figures are adhered to there will be almost no more council house building between now and the next general election. If, on the other hand, rents go up rather more, there will be slightly more money available for new council housing.
While I am strongly and vehemently opposed to the indiscriminate subsidies that are given to those who, for historical reasons, were allocated a council house 20 years ago, when they were genuinely in need, but are now receiving vast support from the taxpayer and ratepayer, I believe that there is and ought to be an important and continuing role for public housing in this country. If those plans were stuck to, a disabled person, or someone who went to work temporarily on an oil rig in Scotland, would not be able to find a council house. He would find that council housing had come to a halt.
Within the next month or so, I hope that we shall be given a clear statement by the Department of the Environment, setting out how cuts of about £2½ billion will be made. We owe that to the people of Britain and to the Tory Party. If we do not have the courage to do it now, it is doubtful whether we shall ever have it.

9 pm

Mr. Roy Hattersley: If the Financial Secretary runs true to form, there will be a moment between 9.30 pm and 10 pm when he will tell us that the economic health of the country is dependent upon massive reductions in public expenditure. Some hon. Members may find that assertion difficult to accept. They may find it difficult to accept that that is the secret of economic success. We have now reached the end of a year during which the inflation rate has doubled and interest rates have reached record heights, and during which unemployment has risen by 150,000 in six months. The Government expect a fall in output of 2·5 per cent.
The Financial Secretary is just the man to brush all that aside and declare the year to be a great economic victory. He may warn us that that victory will be jeopardised if one more nursery school or old people's home is built. He is also the man to suggest that there is no alternative to that policy. As he is not ill informed on these matters, he will know that a number of solutions to our economic problems are consistent with maintaining public expenditure levels at or about the figures advocated by the Opposition.
The right hon. Gentleman must know that one solution is wholly consistent with the general economic and financial philosophy of the Government. Only a year ago the London Business School was the repository of all wisdom. It has said that the PSBR should be increased to £10 billion if output falls by 2 per cent. Indeed, it suggested that it should be increased to a greater figure if output fell at the rate that the Government have suggested.
I remind the Financial Secretary that his principal economic adviser made a statement six months ago, on 14 November. That was a week before he took on new Government responsibilities. He said:
 Monetarism does not say anything directly about public spending... the issue of Government spending is essentially a different argument, it is not a necessary part of monetarism.
My hon. Friends and I believe that the Government have chosen to ignore such advice. They have chosen not only to pursue a monetarist path, but to wed it to an obsession for cutting public expenditure. They have ignored that advice partly as a result of their obsession with a single idea, and partly because they believe, as a matter of faith, dogma and principle, that public expenditure should be cut.
The White Paper is as much about ideology as about economics. That is illustrated in the Prime Minister's favourite cliché about rolling back the frontiers of the State. As today's debate has shown, the Government's policy has made them few friends. By depressing the economy the right hon. and learned Gentleman the Chancellor of the Exchequer has been unable to satisfy those of his critics who wish to see a large reduction in public expenditure, in terms of the share of gross domestic product.
With regard to national output, the Chancellor has been unable to satisfy any of the critics who talked about cutting deeply and changing the ratio between overall spending and public spending. However, he has managed, and will progressively manage, to do more and more damage to a variety of social services. We believe that those services are essential for the nation's health.
It is in our view—it is certainly my view—that even if, by some wild hypothesis, the economy were to be put right,

inflation were to fall, output were to increase, the balance of payments were to move into surplus, there were to be industrial investment again or unemployment were to turn down rather than up, the Government would not choose to restore anything like the services that they are now damaging because they want, as a matter of principle, more private and less public education, more private landlords and fewer rented council houses, more investment in private medicine and a diminished public Health Service.
I take three examples of that point to demonstrate what I mean. The first is an example from the Budget itself. At a time when the Chancellor was talking about massive reductions in education spending—£820 million, almost 10 per cent., over the years 1978–79 to 1983–84—he was at the same time, by adjustments in capital transfer tax and by new exemptions for charities, and all the other related matters concerning charities, providing a massive uncovenanted, unexpected and, in my view, undeserved bonus for the preservation and extension of the public school system.
If that is not a sufficient example of the Government's positive enthusiasm to promote for its own sake the private sector at the expense of the public sector, there were a number of asides by the Chief Secretary in his speech on the second day of the Budget debate—things said not as a central thrust of his speech but in an unguarded moment. He said:
 we can look to the private sector to meet people's demands.
He was talking about housing. He also said:
 We wish to encourage private voluntary effort in the Health Service."—[Official Report, 27 March 1980; Vol. 980, c. 1698–1700.]
He was talking about hospitals.
Time after time there are examples, not simply from what the Government do, but from what they say, of their enthusiasm to reduce the community's responsibility for all its members and to allow the individual to make provision for himself if he is rich enough, powerful enough, foresighted enough and has the financial wherewithal to do so.
I think that that characterises the entire White Paper. There are many areas from which one might take examples but in a speech of this sort examples have to


be chosen from a strictly regulated part of the document. The possible examples are endless. They range from the disgraceful but much debated cuts in the social security programme to the squalid, but, I regret, barely mentioned cut in the overseas aid budget—a cut which, on this occasion, the right hon. Member for Daventry (Mr. Prentice) has managed to accept without resigning from the Government, no doubt in the knowledge that he would not be as popular with his new friends as he once was with his old ones.
I do not want to deal with either the social security aspects or the overseas aid reduction. I want to spend my remaining 23 minutes concerning myself, and I hope the House, with the White Paper's effect on local authority spending and two of the areas for which local authorities are particularly responsible—education and housing.
The overall position for councils, with the exception of housing, is summarised in the White Paper on page 13, in paragraph 46. It shows that current expenditure is to be cut each year between now and the end of the period under review. The overall reduction, compounded for last year, this year and the three subsequent years, is about 10 per cent. The reductions on capital account are worse. Compounded for the entire period, they amount to about 20 per cent. As I hope to show in a minute, the position for housing is even worse—a reduction overall of more than 40 per cent. Yet we continue to be told by Ministers that reductions of that order in the entire area of local authority spending in the housing and education sectors can in some way be effected by painless remedies—by solutions which do not cause unacceptable hardship or suffering to working people and their families.
I was sorry to hear the right hon. Member for Worthing (Mr. Higgins), who I know to be a compassionate and humane man, talking about the need to cut deeper into these programmes. I hope that the right hon. Gentleman understands—if he does not, he may like to come to a constituency such as mine, which is very different from Worthing—the suffering that is caused by cuts of this sort. We delude ourselves—I know that the right hon. Gentleman would not

seek to deceive others—if we talk blandly of the way in which cuts can be made without great suffering for many who need the services provided under the headings in the White Paper. They will suffer if those services are not provided.
The right hon. Gentleman is not the only person to imply that such cuts may be implemented painlessly. Others adopt the same approach; for example, the Chief Secretary to the Treasury during the Budget debate. He told us that although education was being cut substantially—by £840 million over the period—that did not imply any deterioration of education standards.
I wonder in what sort of world the right hon. Gentleman lives. Does he realise that this year capitation allowances to State schools have been reduced by about £4·5 million because of the cuts? Does he know that the National Book League, which makes it its business to know these things, as its livelihood depends on it, tells us that of the £4·5 million reduction in capitation allowances £2·5 million has been saved by schools providing fewer books for their pupils? Does he believe that we can have a policy that reduces so massively the number of books that are put in the classrooms without deteriorating education standards? The answer is that a real reduction in nursery school provision at one end of the life cycle, and in old people's homes at the other, is causing real hardship. There is much evidence that that suffering will continue. It will intensify if the policy that the White Paper provides is implemented, as I fear it will be.
I concede that in a number of sectors the Government do not know exactly where the hardship will fall and where it will be the greatest. Part of the reason for their not knowing that is that Government Members are the sort of people that they are. They are making cuts in an education system about which they know virtually nothing. They are attacking a housing sector in which they have never lived and in which they expect never to have any relations. They are cutting a Health Service of which they rarely take advantage in preference to the private provision that they make for themselves.
It is not only the Government's constitutional ignorance that prevents them


from knowing exactly how bad the cuts will be.

Mr. Eggar: Has the right hon. Gentleman forgotten the events of 1976?

Mr. Hattersley: There are many things that I remember from 1976. The hon. Gentleman will probably recall that during the Budget debate of 1978 his right hon. Friend the present Chief Secretary to the Treasury chided my right hon. Friend the Member for Leeds, East (Mr. Healey), the then Chancellor of the Exchequer, for making cuts in 1976 and restoring them in 1978. That was one of the charges made against that Labour Government. If the hon. Gentleman can assure me that the cuts that are being made now will be restored in a year or two, my criticism of them will not be quite so severe. However, I think that he will find that they will not be restored. The Chancellor is much more likely to respond to Conservative Members who sit on the Back Benches, who want more cuts and deeper cuts and not a mitigation of the suffering—a mitigation which the Labour Government introduced after the 1976 package.
The Government do not know the exact extent of the suffering and hardship that they are causing. In many instances they are making no forecast of the nature of the cuts that they intend to institute under the headings in the White Paper. All that they have done is to decide upon a total for spending and allow individual departmental Ministers to work out the consequences. Those are not the consequences for themselves, but for school children, prospective tenants and old people. It is those people who will have to work out the consequences later. The Government's motto is to cut first and to worry about the suffering afterwards.
I shall give the House two or three examples of why that is clearly so. Education is the first and most obvious example—witness the Government's intention to reduce spending by abandoning rural transport. When the Government found that that intention was frustrated by those in another place, they made no judgment about the necessity of spending. They merely said "The money will have to be found somewhere else ". The Government decided their total sum, and educational necessities had to fit in with the pre-conceived notion of

how much had to be spent. That will be the same with the future education budget.
During his Budget speech the Chancellor of the Exchequer told us that although education spending would fall by 6½ per cent. over the period the effect would not be quite as severe as it might superficially appear because school rolls would fall by 13½ per cent. in the same period and therefore the cuts per pupil and per school would be reduced. It now turns out, according to most authorities, that the cut in the school rolls will not be as great as predicted. My suspicion is that the Chancellor of the Exchequer saw that the primary school rolls were expected to fall by 6 per cent. and the secondary by 20 per cent. so he added them together, divided by two and ended up with a net cut across the entire school population of about 13 per cent. But education authorities believe that the fall in the school population is more likely to be 9 per cent., rather than 13 per cent.
If the Chancellor is saying that we should not worry about the education cuts because reduced numbers of pupils will make them easier to bear, and if his judgment is based on that and those pupil numbers do not fall in line with his prophecies, does anyone believe that the Chancellor will provide extra money to make up the shortfall?
Of course he will not. The right hon. and learned Gentleman will say that the number of pupils had nothing to do with it He will say that education must be cut by £840 million and it is for others—local education authorities, teachers, parents and even pupils themselves—to make up their minds how deeply the blow falls. He will say that his job as Chancellor is to cut, and that it is someone else's job to suffer.
The Government's cuts will, I believe, be far greater than they are prepared to admit. They will be made even greater by the public sector wage awards this year. I hope that the Financial Secretary will answer some detailed questions about the effect of those awards. He will recall that after some close questions by my hon. Friend the Member for Nottingham, West (Mr. English) the Chancellor said that public sector earnings would increase this year by 25 per cent. I am not sure whether that 25 per cent. includes the Clegg award for teachers that was


announced recently, and whether that substantial award will increase the average.
The Chancellor went on to blame that figure very largely on wage awards—comparability awards—left over from the previous Government. I hope that the Financial Secretary will also tell us whether, even if comparability awards are put aside, the figure that the Secretary of State for the Environment included in the rate support grant covered the awards that are to be paid this year. I suspect that it did not. The Secretary of State for the Environment said that his cash limits this year were consistent with an inflation rate of 13 per cent., which has turned out to be a cruel joke on local authorities, and with pay awards of 13 per cent. plus a realistic allowance for last year's comparability, irrespective of the merits of comparability awards.
I stand by that as an essential part of the incomes policy that I want to see in this country, but we must be told whether the pay awards, the cash limits and the rate support grant arrangements turn out to be a further hidden cut, and whether the local authorities have been given enough money to cover those figures or whether they are being left with bigger bills to pay, more cuts to make and the obligation to accept more guilt and responsibility, when it is the Government's financial mismanagement that has brought this about.
The local authority pay awards are like all pay awards—they are, in part, dependent upon Government policy. The local authority workers have discovered that the Government have made things more expensive. This White Paper has made school meals, bus fares and rents more expensive. Therefore, workers will say that if the Government put up prices they should expect to pay bigger wages. The Government's entire policy has created this vicious circle of increased costs, prices and wages, with the inflationary result that we have seen.
In what is left of the half hour at my disposal I want to deal in as much detail as possible with the housing aspects of the White Paper. I think that it was the Chancellor who quoted from Mr. A. J. Balfour in these respects. He probably knows that his uncle, the great Lord Salisbury, said that in politics dogma is

nothing; detail is everything. I blush to think what Lord Salisbury would think about the housing aspects of today's White Paper. It has two main features. The first is that the tables that tell us how much is to be spent are literally blank columns. The second is that the paragraphs that are supposed to justify the Government's spending consist of clichés about the virtues of private enterprise in housing.
I hope that we shall get some information from the Chief Secretary about what is really intended in housing. It was my hope that the Secretary of State for the Environment would speak this evening, but I am delighted that he is here in his place. [HON. MEMBERS: " Why? "] Because he told me so. Perhaps, that is not adequate evidence, but that is why.
I am glad that the Secretary of State for the Environment is in his place, because I must refer once more to what has been said about housing in 1980–81. The Financial Secretary will know what purported to be a statement to the House on the Government's housing intentions was described by two magazines as wilful " obfuscation " and " a statement calculated to mislead." He will know that the figures provided to the House confused outturn with forecast and confused survey prices with outturn prices and, therefore, gave the House a quite misleading impression of the housing prospect for 1980–81.
I hope that we shall have the opportunity to return to the charge with the Secretary of State over this matter in the future. I gave him the opportunity to clear up these matters three weeks ago, but he is so careless about his own reputation that he neither corrected nor withdrew any of the things that he falsely told the House.
Apart from this year, when it is now very clear that house building has come to an almost complete dead halt, I hope that we shall be told what the Government's intentions are for the next year, the year after and the year after that.
I emphasise to the Financial Secretary that this is not a matter of making predictions of the sort that the Chancellor does not like. It is not a matter of forecasts which may or may not turn out to be right. It is simply the Government


making up their minds and telling us what they intend. It is really preposterous that in 1980–81 we have not the faintest idea what the Government intend for house building or for rents. I must conclude, with the hon. Member for Wolverhampton, South-West (Mr. Budgen), that the reason why we are not told what the Government intend in those two particulars is that the Government dare not tell us what they intend, because house building is to be virtually abolished and because rents are to rise to astronomical levels.
We are reinforced in that belief by the Housing Bill, which is presently passing through the House of Commons. I am not allowed to quote from that Bill, although I hope to have an opportunity to do so when it reaches Report stage in a week or two. But you will know, Mr. Speaker, and the House knows—I think that it is possible for me to say this—that in the Housing Bill the Secretary of State will be provided with the widest powers to determine rent levels and subsidy levels. The Secretary of State will be empowered to require local authorities to charge rates at such a level that they actually make a profit on their municipal housing.
It is very clear that when the blank columns on housing are filled in, they will be filled in in such a way that rents will rise in a way that they have never risen previously. The only reason why this is omitted from the White Paper is that the Government do not have the courage to tell the country today, and certainly did not have the courage to publish those figures in a White Paper that was published 10 days before the municipal elections.
But as my hon. Friend the Member for Batley and Morley (Mr. Woolmer) pointed out with great precision and great perception in the Select Committee, the size, weight and strength of the cut contemplated for housing is so great—a reduction of about 48 per cent. over four years—that to meet the Government's targets, rents would have to be increased by 50 per cent. across the board, and still council housing—both thinss together—would be brought virtually to a complete halt.
Indeed, my hon. Friend offered the Chancellor a number of alternatives,

which ranged from doubling council rents to abandoning building altogether. The Chancellor chose none of the prospects offered to him by my hon. Friend. All that he said was that those were the parameters of policy, and that it may be that no more council houses would be built; it may be that municipal rents are to be doubled.
It is intolerable, in terms of Parliament and the country, that the Government know these things, have decided on them, but do not tell us. I tell the Financial Secretary to the Treasury without a moment's equivocation that if he tells me that the Government have no forecast for council house building next year and the year after I shall be unable to believe him. If he tells me that the Government have no forecast for municipal rents from 1981 to 1985, I shall be unable to believe him. Anybody who has served in Government knows that in the Treasury and the Department of the Environment there are papers that forecast how many council houses will be built and what the average rent level will be.
The fact that the Financial Secretary will not tell us the figures that appear on those papers is a disgrace—not in terms of responsibility of the House but in terms of those living in council houses and those who need and want to know their prospects of getting one, and whether there is or is not to be future building.
Why have the Government done all this? In part, it is because they believe that the private sector must surge forward and that the public sector must be held back. They believe—I have read those passages in the White Paper on housing which speak eloquently about private landlords in the private sector—that a society is better when it relies on the private landlord rather than on local authorities.
I tell the Secretary of State for the Environment frankly that he is right in saying that if he creates a massive shortage of rented accommodation by abandoning council house building, private landlords will step in to fill the gap. However, they will not step in to fill the gap in a way that helps the tenants. They will step in in such a way as to exploit the tenants and produce the maximum advantage to themselves.
It is not simply dogma, doctrine and


ideology that prompt the Government to make cuts and reductions and cause suffering and hardship. Until very recently the Government thought that cutting public expenditure and reducing public services were popular in the country. If they believed that last Wednesday, I hope that Thursday convinced them of the error of their ways. I have not been able to raise an eyelid in the House for the past six months without the Secretary of State's accusing me of being the man who personally put rates up all over the country. I wish that I could plead guilty. Were that the case, I would be the man who produced 579 Labour gains in the municipal elections.
I hope that the Secretary of State understands the implications of his policy. He speaks throughout the country no less assiduously than I, telling people that the path of virtue and wisdom is holding down expenditure, at the expense of services if necessary. What kind of response did he get? In Preston, where the Conservatives reduced the rate in the hope of hanging on to power, the Labour Party gained control. In Newcastle, where the rates are the highest in the country, the Labour Party won four seats. In Wolverhampton, where the rate was increased by 56 per cent., the Labour Party gained overall control. The very clear evidence from this country is that the people resent and reject the idea of their services being reduced.

Mrs. Elaine Kellett-Bowman: Mrs. Elaine Kellett-Bowman (Lancaster) rose—

Mr. Hattersley: I shall not give way at 9.28 pm.
The country rejects and resents the damage being done to services. The people do not want old people's homes closed. They do not want nursery classes left unoccupied. They do not want home helps and meals on wheels priced out of the pockets of the poorer pensioners. We are a civilised and compassionate country. On Thursday the country defeated and rejected the idea of cuts in services at any cost. I have no doubt that the country will go on doing that between now and 1984.

The Financial Secretary to the Treasury (Mr. Nigel Lawson): In the current issue of The Listener there is a charming

article by the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) entitled "Municipal Memories". When I listened to his speech winding up the debate for the Opposition, I felt that it was a sequel to that article. He showed no awareness whatever that what we are engaged in is a struggle against the appalling level of inflation that the country has suffered these past 10 years. The whole core of the public expenditure White Paper and of the debate is the struggle against inflation and thereby the restoration of the country's sadly ailing economy to health.
In a speech which ended at 9.28 pm, it was not until 9.27 pm that the right hon. Gentleman brought himself to the subject of the local elections, which no doubt he had been hoping would be the glittering crown of his speech. He knows as well as we do that the local election results were very disappointing to the Labour Party. Since we were defending seats that were won in the year of Walsall and Workington, it is not surprising that the right hon. Gentleman managed to pick up a few seats, but he and the whole of the Opposition are disappointed with the result.
An analysis of the results shows that there is no distinction in the swing between councils that held down their rates and councils that put them up sharply. That proves neither the point he made nor the opposite. It proves that local election results are determined by the country's feelings about the Government in office at the time and, with the present rate of inflation, it is not surprising that the Government are trailing in the polls. What is surprising is that the swing is as slight as it is—far less than it was when the previous Government were in power.
The right hon. Gentleman asked me about the housing cuts. He seemed to suggest that we were suppressing figures. I assure him that no figures are being suppressed. Savings in public expenditure on housing will be produced by a mixture of an increase in rents and a reduction in house building, but the precise mix will be decided year by year in advance of the year in question, and has not been decided now.
The right hon. Gentleman said that the raising of rents was intolerable. Has he forgotten 1976, as my hon. Friend the Member for Enfield, North (Mr. Eggar)


said? Has he forgotten the public expenditure White Paper produced by bis Government in 1976? When speaking in the public expenditure debate in that year the right hon. Member for Heywood and Royton (Mr. Barnett), the then Chief Secretary said:
 I believe that we are right to plan in the longer term for the proportion of housing costs to be borne by rents to grow from 43 per cent in 1976–77 to 50 per cent. by 1980."—[Official Report, 10 March 1976; Vol. 907, c. 453.]
That is what the Labour Government said then.
As the right hon. Member for Spark-brook seemed to assume that there was an ideological issue here, I will quote further from what the right hon. Member for Heywood and Royton said at a Labour Party meeting later that year:
I simply ask if, within the tight financial constraints with which we have to work, it is right socially or for us as socialists to say that 57 per cent. of housing costs shall be part of public expenditure, i.e., transfer payments financed out of taxation or borrowing? 
That is the line the previous Government were taking then.
What has happened? Has the proportion of housing costs to be borne from rents risen to 50 per cent. by 1980? Far from it. It has fallen to 41 per cent. Rents now cover 41 per cent. of housing costs. There is no point in the right hon. Gentleman trying to pretend that by changing this we desire to impoverish the poor—who get rent rebates in any case.
The right hon. Gentleman asked me a question about public sector wage awards and whether the 25 per cent. central Government pay increase this year included the Clegg award for teachers. He was slightly confused. Teachers are not in the central Government category; they come under local government.
The figure for the total public service increase was 23 per cent. and not 25 per cent., which includes the Clegg award for teachers. The 13 per cent. on the rate support grant, to which the right hon. Gentleman also alluded, does not include the Clegg increase. A further increase was given in the rate support grant to take that into account. I hope that the right hon. Gentleman is satisfied with those answers to his questions, which he seemed to think were of the first importance.
In the time available I shall deal with the main themes that emerged in the debate, which was more than simply a debate on the public expenditure White Paper. Towards the end of my speech I shall come to the points made by the right hon. Member for Leeds, East (Mr. Healey).

Mr. Higgins: Is the whole Clegg award covered within that 25 per cent., or is some staged to a later year?

Mr. Lawson: The Clegg award is included in the 23 per cent. I was out of the Chamber for my right hon. Friend's contribution, but I believe that he was more concerned with the staging of Civil Service pay, which is the 25 per cent. There is an element of staging in order to bring this year's pay award to civil servants within the 14 per cent., but it is a small element of staging of about 2 per cent. [Interruption.] There is no point in hon. Gentlemen laughing. The staging is only about 2 per cent., which is in contrast to what the previous Government did. The 25 per cent. figure has arisen because there was an 11 per cent. overhang from last year. It is a postdated cheque that we had to pay on top of the 14 per cent. cash limit, which makes the 25 per cent. increase in all. The staging that goes on from the 14 per cent. for next year is only 2 per cent.

Mr. Higgins: In addition to the teachers' component of the 25 per cent., is there a further post-dated cheque for them next year?

Mr. Lawson: That is for the local authorities to negotiate. In the rate support grant, full allowance was given for what was thought likely to emerge from the Clegg award, and what, indeed, did emerge. Therefore, full allowance is made there.
May I briefly deal with a point raised by my hon. Friend the Member for Croydon, North-West (Mr. Taylor), who was concerned about the Manpower Services Commission? A review of training services is being undertaken by the Manpower Services Commission, but the Government will be carefully considering the future of those services when the review is complete. The Government's expenditure plans already envisage a substantial fall in the employment and training programme, and the Manpower Services Commission staff is to be cut by


about 15 per cent. Moreover, its corporate plan, published in the minutes of evidence of the Employment Committee, shows an expected fall from £305 million to £278 million in expenditure on the Manpower Services Commission's training services division. My hon. Friend and others concerned that there have been no attempts to prune the Manpower Services Commission can be reassured that that is not the case.

Mr. Robert Taylor: I am grateful to my hon. Friend for making that point, but what is the reason for the Manpower Services Commission carrying out a review of its own activities? It will obviously come to the conclusion that that activity should continue.

Mr. Lawson: My hon. Friend made that point in the debate. First, cuts are already planned. Secondly, the Government will scrutinise the review very keenly indeed.
Hon. Members were concerned about forecasts. Far too much play has been made about forecasts. It may be helpful if I quote at some length from evidence given earlier this year to the House of Lords Select Committee on Unemployment by Mr. Samuel Brittan, whom many would consider to be as perceptive a critic of Governments as any member of the Treasury Select Committee. He said:
 You asked about the previous discussion where I heard a lot about whether unemployment in 1983 was going to be 1·6 or 24 million. Estimates were requested by some members of what the unemployment rate might be in 1990 or the year 2000. May I be humble enough to say that I have not the faintest idea, but arrogant enough to say that most of the economic institutes who calculate this have no idea either. How many people in the First World War would have forecast the unemployment rates of the great depression? If the Committee had been meeting in 1933, how many could have forecast the post-war unemployment rates.
He concluded
These projections are not merely a harmless distraction. They divert the attention of economists from matters on which they can give interesting views (such as what are the forces making unemployment unnecessarily high and what can be done about them) to crystal-gazing, which is not something they or anybody else has a power to do.

Mr. Healey: Will the Financial Secretary explain, therefore, why he and all his right hon. and hon. Friends compelled the last Government and, now, them

selves to publish forecasts twice a year in very great detail?

Mr. Lawson: The forecasts that were published as a result of the Industry Act amendments resulted from an all-party vote and they are short-term forecasts. In implementation of our sceptical attitude to the value of looking so far ahead we shall in next year's public expenditure survey not be including the figure for the fourth year ahead—that is, for the final year. The last year of the next public expenditure survey will be 1983–84, the same as this time.

Mr. J. Enoch Powell: Hear, hear.

Mr. Lawson: I am grateful for the support of the right hon. Member for Down, South (Mr. Powell).
There was also concern about the inflationary effect and the effect on public expenditure of high pay settlements in the public services. Having belatedly discovered during the winter of discontent that pay policies do not work, the previous Administration sought to improve their electoral prospects by setting up the Clegg Commission complete with a bundle of post-dated open cheques with which to bribe their friends in the public service unions to accept reasonable settlements in the last pay round. They did so safe in the knowledge that they were most unlikely to have to foot the bill.
All of the major references to Clegg were made, or negotiations concluded, before the election. In the circumstances we were obliged to honour the commitments which our predecessors had so unwisely given. That is why earnings in the public services have risen faster than in the economy as a whole.

Mr. Rippon: When is it proposed to disband the Clegg Commission?

Mr. Lawson: I was coming to that. We shall in due course have to take a decision on the future of the Commission and I can assure the House that that is under active study at present.

Mrs. Kellett-Bowman: Mrs. Kellett-Bowman rose—

Hon. Members: Give way.

Mr. Speaker: Order. The Minister must be allowed to continue his speech.

Mr. Lawson: I give way to my hon. Friend, Mr. Speaker.

Mrs. Kellett-Bowman: Will action be taken against those members of the Civil Service who gave incorrect evidence to the Clegg Commission about the staging of various awards? It has been a thoroughly misleading report.

Mr. Lawson: That is not a matter for me, but I am sure that it has been noted. The future of the Clegg Commission is under active review.
My right hon. Friend the Member for Taunton (Mr. du Cann) and other hon. Members raised the question of Civil Service manpower. It is worth referring the House to trends in Civil Service manpower over past years. Between 1964 and 1970, when the Labour Government were in power—these figures are adjusted to be on a comparable basis—Civil Service manpower increased by 29,000. During the four years of the Conservative Administration from 1970 to 1974, Civil Service manpower dropped by 6,000. During the subsequent Labour Government's term of office, from 1974 to 1979, Civil Service manpower rose by 39,000. During the short time that the present Government have been in office, Civil Service manpower has fallen again by 27,000. There are plans for a further substantial reduction during our period of office.
I was asked about local authorities. It is true that there has not been a similar fall in local authority manpower. We have no powers to control or determine local government manpower. As my right hon. and learned Friend the Chancellor said in his Budget speech, local authorities must now give high priority to achieving reductions in local authority manpower.
Another theme running through the debate was the distinction between cuts in capital expenditure and cuts in current expenditure. I accept that a high proportion of the cuts that we have announced for this year are in capital expenditure, 57 per cent. to be precise. That may be too much, but it ill behoves Opposition Members to say that. In the IMF cuts of 1977–78, 72 per cent. of the cuts were in capital expenditure and 33 per cent. cuts in construction expenditure directly, compared with 25 per cent. in the cuts that we have introduced.

Mr. English: Do I recollect the hon. Gentleman himself criticising that at the

time? The hon. Gentleman now apparently approves of capital cuts when, on the previous occasion, he did not.

Mr. Lawson: I did indeed criticise that at the time. The cuts in capital expenditure, as I have pointed out, form a considerably smaller proportion of the cuts that we have introduced this year than was the case with the cuts introduced by the right hon. Member for Leeds, East (Mr. Healey).
It would be helpful if those who criticise the cuts but accept the overall need for economies in public expenditure and the overall need for a declining profile of total Government expenditure, as advocated by many of my hon. Friends, would come forward and suggest what cuts they would prefer instead of the cuts that we have introduced. I know that this is very difficult. It would, however, be valuable and helpful if the Treasury Select Committee, for example, in its next report, were to propose the cuts that it would prefer to see to the cuts in capital expenditure that we have proposed.
It is no use simply talking about cutting out wastage. As my hon. Friend the Member for Ludlow (Mr. Cockeram) said, functions, too, have to be cut if Civil Service numbers and public service current costs are to be reduced. It is incumbent on those of my hon. Friends who dislike the pattern of cuts that we have introduced to suggest what functions they believe we should cut.

Mr. Healey: Does not the hon. Gentleman recall the present Prime Minister, when addressing Conservative candidates at the beginning of the last general election campaign, said "Do not talk about cutting public expenditure. Talk about cutting out waste ".

Mr. Lawson: I know that, in public expenditure debate after public expenditure debate during the right hon. Gentleman's tenure of the Chancellorship, my right hon. and learned Friend and I made clear, time and again, that there would have to be cuts going far beyond the elimination of waste. We referred specifically to housing and to a number of other areas. There is no point in the right hon. Gentleman throwing that at us.
The right hon. Member for Leeds, East is so anxious to secure the leadership of


the Labour Party that he is planning to speak on two days in succession. He is to give us a second performance tomorrow. I hope, for his sake, that tomorrow's performance is better than today's. He gave us 50 minutes of the most turgid animadversions to which I have had the misfortune to listen. Among other things, he said that we were way outside our monetary targets. That is nut so. The monetary figures published today show, as my right hon. and learned Friend said, that monetary growth during our first target period from June last year to April this year worked out at an annual rate of about 10 per cent., and that is within the 7 per cent. to 11 per cent. target.

Mr. Healey: Does the hon. Gentleman agree that he told the House, in answer to a question, that 9 per cent. which was in the Financial Statement last June, was the target for this year? Does he agree with the estimate in the current Financial Statement and Budget Report that 2 per cent. must be added to the figure which he has quoted in order to take account of the evasion of monetary control through acceptances and other devices? Does he agree that the actual increase is 12 per cent., which is outside the range and 3 per cent. higher than the figure which the Chancellor gave last June as the Government's target?

Mr. Lawson: That was a long-winded intervention. If the right hon. Gentleman wants me to include acceptances, he will recall that during the 18 months up to June 1979 under his stewardship the annual rate of growth in the money supply was 15 per cent. Furthermore, including the acceptances leak, in the last six months when we really had the money supply under control, the annual rate of growth of sterling M3 has been only a shade over 7 per cent., right at the bottom of the target range.

Mr. Healey: I remind the hon. Gentleman that he told the House that the target for the year starting last October was 7 per cent. He has just said that in the last six months he has somewhat exceeded that target.

Mr. Lawson: That really is pathetic. The right hon. Gentleman certainly will not achieve the leadership of his party

that way. This augurs well—in the year ahead, not necessarily immediately—for the level of interest rates. There is much concern about interest rates, understandably. Just as last year was a year of rising interest rates this year is likely to be one of falling interest rates.
The right hon. Member for Leeds, East seemed to say that we were wholly wrong in our medium-term financial strategy to pay any attention whatsoever to the public sector borrowing requirement. He said that the PSBR had no connection whatever either with rates of interest or with the rate of monetary growth. That is a strange doctrine even for him to espouse. Since the right hon. Gentleman spoke I have looked up what he said in his first Budget speech on 26 March 1974:
This does not mean that we can afford a public sector borrowing requirement at anything like the level of last year. The vast deficit in the public sector was then an important factor in the excessive monetary expansion. So I am aiming at a massive reduction in the public sector borrowing requirement ".—[Official Report, 26 March 1974; Vol. 871, c. 294.]
He did not think that the public sector borrowing requirement did not matter then. At that time he established a direct link with the rate of monetary expansion. In that same Budget Statement the right hon. Gentleman said:
 Our aim will be to bring about a reduction in interest rates from their present high level as soon as is feasible. There is no short cut available here. It will depend above all on our success in reducing inflationary expectations, since without question they are a major cause of high nominal interest rates. It will depend on our ability to restrict the public sector borrowing requirement ".—[Official Report, 26 March 1974; Vol. 871, c. 284.]
So, there the right hon. Gentleman was saying that there was a direct link between interest rates and the public sector borrowing requirement. It really is absurd of him to come here and try to tell the House that there is no connection between the public sector borrowing requirement and either monetary growth or inflation.
He also asked me specific questions which I think I should answer, on the shortfall figures in the White Paper and on the relative price effect. The right hon. Gentleman seemed to suggest that the shortfall figures were fudged so as to make the sums add up. By that I assume


that he meant that we had increased the shortfall figures in order to make the cuts look better than they would otherwise be.

Mr. Healey: Mr. Healey indicated assent.

Mr. Lawson: I see that he is nodding. We have reduced the shortfall figures. As usual, he is 100 per cent. wrong They are now half what they were in the right hon. Gentleman's White Paper. Far from fudging the figures we have been prudent, cautious and realistic.
The right hon. Gentleman affected to say, in relation to the relative price effect, that there was an unexplained discrepancy between the 0·7 per cent. relative price effect in the White Paper and the 7 per cent. relative price effect—in the medium term financial strategy, a difference of 10:1. I can only say to him that he has got his figures wrong again. There is no 7 per cent. relative price effect in the medium term financial strategy and I challenge the right hon. Gentleman to show me where that figure is. It is not there at all.

Mr. Healey: I can tell the right hon. Gentleman precisely where it is. The 7 per cent. gap is the difference between the 20 per cent. increase in public sector pay and the 13 per cent. increase in inflation allowed for in the FSBR.

Mr. Lawson: In that case the right hon. Gentleman is making the elementary mistake of assuming that the only factor in the relative price effect is the level of public sector pay. There are many other factors which cancel out the pay figures. The net effect is a figure of 0·7 per cent. That figure is explained in the note which was sent to the Select Committee and which I am sure the right hon. Gentleman can go back and read.
He also seemed to think that it was wholly intolerable—his position was a rather curious one—that our public expenditure cuts were so savage and deep. But he then went on to say that there were no cuts at all but that we were increasing public expenditure. I wish that the right hon. Gentleman would make up his mind which of the two it is. He further said that

in so far as the Government were cutting public expenditure those cuts were effected by increases in charges by the nationalised industries, that that was wholly wrong and that we should not do it.

Let me again read to the House from the right hon. Gentleman's White Paper on nationalised industries which he brought out in 1978. That White Paper said this:
 The Government intends that the nationalised industries will not be forced into deficits by restraints on their prices. When help has to be given to the poorer members of the community it will be given primarily through the social security and taxation systems and not by subsidising nationalised industry prices.

That is precisely our policy. We believe that we can secure the turn-round in the finances of the nationalised industries which are implicit in the public expenditure White Paper and in the medium term financial strategy.

I can tell my right hon. Friends, and in particular my right hon. Friend the Member for Taunton (Mr. du Cann), who was worried about whether the public expenditure figures would be attained and whether the nationalised industry turn-round would be attained, that we believe these figures to be perfectly reasonable and feasible.

Of course, there can be no guarantee over the years ahead that nationalised industry finances will work out precisely like that. But we have made clear that if it does not work out like that we will take other measures to validate the monetary targets to ensure that the strategy is intact.

We have had no remotely acceptable alternative put forward this evening: nothing except more spending, more borrowing, more uncontrolled printing of money and more inflation. That was the policy rejected by the electorate at the last general election. I believe that it will be rejected by them again when they have the chance and I ask the House to reject it tonight.

Question put, That the amendment be made.

The House divided: Ayes 241, Noes 303.

Division No. 286]
AYES
[10 pm


Abse, Leo
Anderson, Donald
Ashton, Joe


Adams, Allen
Archer, Rt Hon Peter
Atkinson, Norman (H'gey, Tott'ham)


Allaun, Frank
Armstrong, Rt Hon Ernest
Barnett, Guy (Greenwich)


Alton, David
Ashley, Rt Hon Jack
Barnett, Rt Hon Joel (Heywood)




Belth, A. J.
Hamilton, James (Bothwell)
Pavitt, Laurie


Bonn, Ft! Hon Anthony Wedgwood
Hamilton, W. W. (Central Fife)
Pendry, Tom


Bennett, Andrew (Stockport N)
Hardy, Peter
Penhaligon, David


Bldwell, Sydney
Harrison, Rt Hon Walter
Powell, Raymond (Ogmore)


Booth, Rt Hon Albert
Hart, Rt Hon Dame Judith
Prescott, John


Bottomley, Rt Hon Arthur (M'brough)
Hattersley, Rt Hon Roy
Price, Christopher (Lewisham West)


Bradley, Tom
Haynes, Frank
Race, Reg


Bray, Dr Jeremy
Healey, Rt Hon Denis
Radice, Giles


Brown, Hugh D. (Provan)
Heffer, Eric S.
Rees, Rt Hon Merlyn (Leeds South)


Brown, Robert C. (Newcastle W)
Hogg, Norman (E Dunbartonshire)
Richardson, [...]


Brown, Ronald W. (Hackney S)
Home Robertson, John
Roberts, Albert (Normanton)


Brown, Ron (Edinburgh, Lelth)
Homewood, William
Roberts, Allan (Bootle)


Buchan, Norman
Horam, John
Roberts, Ernest (Hackney North)


Callaghan, Jim (Mlddleton & P)
Howell, Rt Hon Denis (B'ham, Sm H)
Roberts, Gwilym (Cannock)


Campbell, Ian
Howells, Geraint
Robertson, George


Campbell-Savours, Dale
Huckfield, Les
Robinson, Geoffrey (Coventry NW)


Canavan, Dennis
Hudson, Davies, Gwilym Ednyfed
Rodgers, Rt Hon William


Cant, R. B.
Hughes, Robert (Aberdeen North)
Rooker, J. W.


Carmlchael, Nell
Hughes, Roy (Newport)
Roper, John


Carter-Jones, Lewis
Janner, Hon Greville
Ross, Ernest (Dundee West)


Cartwright, John
Jay, Rt Hon Douglas
Ross, Stephen (Isle of Wight)


Clark, Dr David (South Shields)
John, Brynmor
Rowlands, Ted


Cocks, Rt Hon Michael (Bristol S)
Johnson, James (Hull West)
Ryman, John


Concannon, Rt Hon J. D.
Johnston, Russell (Inverness)
Sever, John


Cook, Robin F.
Jones, Rt Hon Alec (Rhondda)
Sheerman, Barry


Cox, Tom (Wandsworth, Tooting)
Jones, Barry (East Flint)
Sheldon, Rt Hon Robert (A'ton-u-L)


Crowther, J. S.
Kaufman, Rt Hon Gerald
Shore, Rt Hon Peter (Step and Pop)


Cryer, Bob
Kerr, Russell
Silkln, Rt Hon John (Deptford)


Cunllffe, Lawrence
Kilfedder, James A.
Silkin, Rt Hon S. C. (Dulwlch)


Cunningham, George (Islington S)
Kilroy-Silk, Robert
Silverman, Julius


Cunningham, Dr John (Whitehaven)
Kinnock, Neil
Smith, Rt Hon J. (North Lanarkshire)


Dalyell, Tam
Lambie, David
Snape, Peter


Davidson, Arthur
Lamborn, Harry
Soley, Clive


Davies, Rt Hon Denzil (Llanelli)
Leadbitter, Ted
Spearing, Nigel


Davies, Ifor (Gower)
Leighton, Ronald
Spriggs, Leslie


Davis, Clinton (Hackney Central)
Lestor, Miss Joan (Eton & Slough)
Stallard, A. W.


Dean, Joseph (Leeds West)
Lewis, Arthur (Newham North West)
Stewart, Rt Hon Donald (W Isles)


Dempsey, James
Lewis, Ron (Carlisle)
Stoddart, David


Dewar, Donald
Litherland, Robert
Strang, Gavin


Dixon, Donald
Lofthouse, Geoffrey
Straw, Jack


Dobson, Frank
Lyon, Alexander (York)
Summerskill, Hon Dr Shirley


Dormand, Jack
Lyons, Edward (Bradford West)
Taylor, Mrs Ann (Bolton West)


Douglas-Mann, Bruce
McDonald, Dr Oonagh
Thomas, Dafydd (Merioneth)


Dubs, Alfred
McElhone, Frank
Thomas, Jeffrey (Abertillery)


Duffy, A. E. P.
McGuire, Michael (Ince)
Thomas, Dr Roger (Carmarthen)


Dunn, James A. (Liverpool, Kirkdale)
McKelvey, William
Thorne, Stan (Preston South)


Dunwoody, Mrs Gwyneth
MacKenzie, Rt Hon Gregor
Tilley, John


Eadie, Alex
Maclennan, Robert
Tinn, James


Eastham, Ken
McNally, Thomas
Urwln, Rt Hon Tom


Ellis, Raymond (NE Derbyshire)
McWilliam, John
Varley, Rt Hon Eric G.


Ellis, Tom (Wrexham)
Magee, Bryan
Walnwright, Edwin (Dearne Valley)


English, Michael
Marks, Kenneth
Wainwright, Richard (Colne Valley)


Ennals, Rt Hon David
Marshall, David (GI'sgow, Shettles'n)
Walker, Rt Hon Harold (Doncaster)


Evans, loan (Aberdare)
Marshall, Dr Edmund (Goole)
Watkins, David


Evans, John (Newton)
Mason, Rt Hon Roy
Weetch, Ken


Ewing, Harry
Maxton, John
Wellbeloved, James


Faulds, Andrew
Meacher, Michael
Welsh, Michael


Field, Frank
Mellish, Rt Hon Robert
White, Frank R. (Bury & Radcliffe)


Fitch, Alan
Mikardo, Ian
White, James (Glasgow, Pollok)


Filt, Gerard
Millan, Rt Hon Bruce
Whitehead, Phillip


F'annery, Martin
Miller, Dr M. S. (East Kilbride)
Whltlock, William


Fletcher, L. R. (Ilkeston)
Mitchell, R. C. (Soton, Itchen)
Wigley, Dafydd


Fletcher, Ted (Darlington)
Morris, Rt Hon Alfred (Wythenshawe)
Williams, Rt Hon Alan (Swansea W)


Foot, Rt Hon Michael
Morris, Rt Hon Charles (Openshaw)
Williams, Sir Thomas (Warrington)


Ford, Ben
Morris, Rt Hon John (Aberavon)
Wilson, Gordon (Dundee East)


Forrester, John
Morton, George
Wilson, Rt Hon Sir Harold (Huyton)


Foster, Derek
Moyle, Rt Hon Roland
Wilson, William (Coventry SE)


Foulkes, George
Newens, Stanley
Winnlck, David


Fraser, John (Lambeth, Norwood)
Oakes, Rt Hon Gordon
Woodall, Alec


Freeson, Rt Hon Reginald
Ogden, Eric
Woolmer, Kenneth


Garrett, John (Norwich S)
O'Halloran, Michael
Wrigglesworth, Ian


Garrett, W. E. (Wallsend)
O'Neill, Martin
Wright, Sheila


George, Bruce
Orme, Rt Hon Stanley
Young, David (Bolton East)


Gilbert, Rt Hon Dr John
Owen, Rt Hon Dr David



Ginsburg, David
Palmer, Arthur



Gourlay, Harry
Park, George
TELLERS FOR THE AYES:


Grant, George (Morpeth)
Parker, John
Mr. Terry Davis and


Grant, John (Islington C)
Parry, Robert
Mr. Donald Coleman.


NOES


Adley, Robert
Arnold, Tom
Baker, Kenneth (St. Marylebone)


Altken, Jonathan
Asplnwatl, Jack
Baker, Nicholas (North Dorset)


Alexander, Richard
Atkins, Rt Hon H. (Spelthorne)
Banks, Robert


Alison, Michael
Atkins, Robert (Preston North)
Beaumont-Dark, Anthony


Amery, Rt Hon Julian
Atkinson, Daivid (B'mouth, East)
Bendall, Vivian







Bennett, Sir Frederic (Torbay)
Grant, Anthony (Harrow C)
Mitchell, David (Basingstoke)


Benyon, Thomas (Abingdon)
Greenway, Harry
Moate, Roger


Benyon, W. (Buckingham)
Grieve, Percy
Molyneaux, James


Bevan, David Gilroy
Griffiths, Eldon (Bury St Edmunds)
Monro, Hector


Biffen, Rt Hon John
Griffiths, Peter (Portsmouth N)
Montgomery, Fergus


Blggs-Davison, John
Grist, Ian
Moore, John


Blackburn, John
Grylls, Michael
Morgan, Geralnt


Bonsor, Sir Nicholas
Hamilton, Hon Archie (Eps'm&Ew'll)
Morris, Michael (Northampton, Sth)


Boscawen, Hon Robert
Hamilton, Michael (Salisbury)
Morrison, Hon Charles (Devizes)


Botlomley. Peter (Woolwich West)
Hampson, Dr Keith
Morrison, Hon Peter (City of Chester)


Boyson, Dr Rhodes
Hannam, John
Mudd, David


Bralne, Sir Bernard
Haselhurst, Alan
Murphy, Christopher


Bright, Graham
Hawkins, Paul
Myles, David


Brinton, Tim
Hawksley, Warren
Needham, Richard


Brlttan, Leon
Hayhoe, Barney
Nelson, Anthony


Brooke, Hon Peter
Heath, Rt Hon Edward
Neubert, Michael


Brotherton, Michael
Heddle, John
Newton, Tony


Brown, Michael (Brigg & Sc'thorpe)
Henderson, Barry
Normanton, Tom


Browne, John (Winchester)
Heseltine, Rt Hon Michael
Oppenheim, Rt Hon Mrs Sally


Bruce-Gardyne, John
Hicks, Robert
Osborn, John


Bryan, Sir Paul
Higglns, Rt Hon Terence L.
Page, John (Harrow, West)


Buck, Antony
Hill, James
Page, Rt Hon Sir R. Graham


Budgen, Nick
Holland, Philip (Carlton)
Page, Richard (SW Hertfordshire)


Bulmer, Esmond
Hooson, Tom
Paisley, Rev Ian


Burden, F. A.
Hordern, Peter
Parkinson, Cecil


Butcher, John
Howe, Rt Hon Sir Geoffrey
Parrls, Matthew


Butler, Hon Adam
Howell, Rt Hon David (Guildford)
Patten, Christopher (Bath)


Cadbury, Jocelyn
Howell, Ralph (North Norfolk)
Patten, John (Oxford)


Carlisle, John (Luton West)
Hunt, David (Wirral)
Pattle, Geoffrey


Carlisle, Kenneth (Lincoln)
Hunt, John (Ravensbourne)
Pawsey, James


Carlisle, Rt Hon Mark (Runcorn)
Irving, Charles (Cheltenham)
Percival, Sir Ian


Chalker, Mrs. Lynda
Jenkln, Rt Hon Patrick
Pink, R. Bonner


Chapman, Sydney
Jessel, Toby
Pollock, Alexander


Churchill, W. S.
Johnson Smith, Geoffrey
Porter, George


Clark. Hon Alan (Plymouth, Sutton)
Jopling, Rt Hon Michael
Powell, Rt Hon J. Enoch (S Down)


Clark, Sir William (Croydon South)
Joseph, Rt Hon Sir Keith
Prentice, Rt Hon Reg


Clarke, Kenneth (Rushcliffe)
Kaberry, Sir Donald
Price, David (Eastleigh)


Cockeram, Eric
Kellett-Bowman, Mrs Elaine
Prior, Rt Hon James


Colvln, Michael
Kimball, Marcus
Proctor, K. Harvey


Cope, John
King, Rt Hon Tom
Pym, Rt Hon Francis


Cormack, Patrick
Kitson, Sir Timothy
Raison, Timothy


Corrie, John
Knight, Mrs Jill
Rathbone, Tim


Costain, A. P.
Knox, David
Rees, Peter (Dover and Deal)


Cranborne, Viscount
Lamont, Norman
Rees-Davies, W. R.


Critchley, Julian
Lang, Ian
Renton, Tim


Crouch, David
Langford-Holt, Sir John
Rhodes James, Robert


Dean, Paul (North Somerset)
Latham, Michael
Rhys Williams, Sir Brandon


Dickens, Geoffrey
Lawrence, Ivan
Ridsdale, Julian


Dorrell, Stephen
Lawson, Nigel
Rlfkind, Malcolm


Douglas-Hamilton, Lord James
Lee, John
Rlppon, Rt Hon Geoffrey


Dover, Denshore
Lennox-Boyd, Hon Mark
Roberts, Michael (Cardiff NW)


du Cann, Rt Hon Edward
Lester, Jim (Beeston)
Roberts, Wyn (Conway)


Dunlop, John
Lewis, Kenneth (Rutland)
Rossi, Hugh


Dunn, Robert (Dartford)
Lloyd, Ian (Havant & Waterloo)
Rost, Peter


Durant, Tony
Lloyd, Peter (Fareham)
Royie, Sir Anthony


Dykes, Hugh
Loverldge, John
Sainsbury, Hon Timothy


Eden, Rt Hon Sir John
Luce, Richard
St. John-Stevas, Rt Hon Norman


Edwards, Rt Hon N. (Pembroke)
Lyell, Nicholas
Scott, Nicholas


Eager, Timothy
McCrindle, Robert
Shaw, Michael (Scarborough)


Emery, Peter
McCusker, H.
Shelton, William (Streatham)


Eyre, Reginald
Macfarlane, Nell
Shepherd, Colin (Hereford)


Falrbalrn, Nicholas
MacGregor, John
Shepherd, Richard(Aldridge-Br'hills)


Fafrgrieve, Russell
MacKay, John (Argyll)
Shersby, Michael


Faith, Mrs Sheila
Macmillan, Rt Hon M. (Farnham)
Silvester, Fred


Farr, John
McNair-Wllson, Michael (Newbury)
Sims, Roger


Fell, Anthony
McNair-Wllson, Patrick (New Forest)
Skeet, T. H. H.


Fenner. Mrs Peggy
McQuarrie, Albert
Smith, Dudley (War. and Leam'ton)


Finsberg, Geoffrey
Madel, David
Speed, Keith


Fisher, Sir Nigel
Major, John
Speller, Tony


Fletcher, Alexander (Edinburgh N)
Marland, Paul
Spfcer, Jim (West Dorset)


Fletcher-Cooke, Charles
Marlow, Tony
Spicer, Michael (S Worcestershire)


Fookes, Miss Janet
Marshall, Michael (Arundel)
Sproat, lain


Forman, Nigel
Marten, Neil (Banbury)
Squire, Robin


Fowler, Rt Hon Norman
Mates, Michael
Stalnton, Keith


Fraser, Rt Hon H. (Stafford S St)
Mather, Carol
Stanbrook, Ivor


'Fraser, Peter (South Angus)
Maude, Rt Hon Angus
Stanley, John


Fry, Peter
Mawby, Ray
Steen, Anthony


Galbraith, Hon T. G. D.
Mawhinney, Dr Brian
Stevens, Martin


Gardiner, George (Reigate)
Maxwelf-Hyslop, Robin
Stewart, Ian (Hitchin)


Gardner, Edward (South Fylde)
Mayhew, Patrick
Stewart, John (East Renfrewshire)


Garel-Jones, Tristan
Mellor, David
Stokes, John


Glyn, Dr Alan
Meyer, Sir Anthony
Stradling Thomas, J.


Goodhart, Philip
Miller, Hal (Bromsgrove & Redditch)
Tapsell, Peter


Goodhew, Victor
Mills, lain (Meriden)
Taylor, Robert (Croydon NW)


Gow, Ian
Mills, Peter (West Devon)
Taylor, Teddy (Southend East)


Gower, Sir Raymond
Miscampbell, Norman
Tebbit, Norman







Temple-Morris, Peter
Wakeham, John
Whitney, Raymond


Thomas, Rt Hon Peter (Hendon S)
Waldegrave, Hon William
Wlggin, Jerry


Thompson, Donald
Walker, Bill (Perth & E Perthshire)
Wilkinson, John


Thorne, Neil (llford South)
Walker-Smith, Rt Hon Sir Derek
Williams, Delwyn (Montgomery)


Thornton, Malcolm
Wall, Patrick
Winterton, Nicholas


Townsend, Cyril D. (Bexleyheath)
Waller, Gary
Wolfson, Mark


Trippier, David
Ward, John
Young, Sir George (Acton)


Trotter, Neville
Warren, Kenneth



van Straubenzee, W. R.
Watson, John
TELLERS FOR THE NOES:


Vaughan, Dr Gerard
Wells, John (Maidstone)
Mr. Spencer Le Marchant and


Viggers, Peter
Wells, Bowen (Hert'rd & Stev'nage)
Mr. Anthony Berry.


Waddington, David
Wheeler, John

Question accordingly negatived.

Main Question put and agreed to.

Resolved,

That this House takes note of the White Paper on the Government's Expenditure Plans 1980–81 to 1983–84 [Cmnd. 7841].

SOUTHERN RHODESIA (SANCTIONS AND AMNESTY)

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): I beg to move,
That the Southern Rhodesia (Sanctions) (Amnesty) Order 1980, a copy of which was laid before this House on 23 April, be approved.
The order is made under section 3—

Mr. Speaker: Order. I think that it would be fairer to the Minister if he would wait for one moment. As this is a timed debate, I shall time it from the moment that I call him.

Mr. Luce: The order is made under section 3 of the Southern Rhodesia Act 1979, by which power was granted to deal with the consequences of the expiry of sanctions provisions. The purpose of this order is to make provision for an amnesty, covering criminal proceedings, for offences against those measures which provided for the imposition of economic sanctions or other sanctions against Rhodesia.
My right hon. Friend the Lord Privy Seal gave the background to the Government's decision to grant an amnesty for sanctions offences in his statement to this House on 15 April. The Zimbabwe Act 1979 granted an amnesty in United Kingdom law for political offences in furtherance of, or resistance to, UDI. A similar amnesty was made by the Governor in Rhodesian law. In these circumstances, the Government consider that it would be inappropriate for any further prosecutions to be initiated for sanctions offences. This order therefore affects the last category of people involved in the sad business of UDI. There are no prosecutions for sanctions offences pending. The appeal to which my right hon. Friend referred on 15 April has now been determined.
Past convictions are not affected by this order, nor does the order mean that the Government condone the actions of sanctions breakers. But, with the decision of the Director of Public Prosecutions not to proceed over matters arising from the Bingham report, and in the absence of any

pending proceedings, the time now appears right to complete the necessary arrangements for a comprehensive amnesty.
The Government regard an amnesty both for political and for sanctions offences as an essential element in the overall settlement of the problem of Rhodesia. So much has happened over the past four months that it is easy to forget how great a change has taken place in that country and how much its international standing has been affected. It is now recognised world-wide as a sovereign and independent country and as a full member of the Commonwealth.
One of the most gratifying aspects of the political settlement has been the welcome extended to Zimbabwe by the international community. The presence of distinguished foreign guests at the independence celebrations in Salisbury is evidence in itself of this. Our task now is to look to the future and to work for reconciliation. It would be quite incompatible with these objectives to continue prosecutions for sanctions offences.

Mr. Stephen Ross: A constituent of mine received a summons for sanctions breaking. The summons has now been put aside. However, goods have been impounded and are about to be destroyed. Will any direction be conveyed to the Customs and Excise to release the goods to my constituent?

Mr. Luce: I cannot give the hon. Gentleman a specfic answer. My hon. and learned Friend the Solicitor-General is in the Chamber and he will be happy to deal with the question when he replies.

Mr. Alexander W. Lyon: We have been told that the Director of Public Prosecutions does not intend to continue the prosecution against those concerned in the Bingham report. Does that mean that the order does not affect those named in the report?

Mr. Luce: I do not know whether the hon. Gentleman was in the Chamber at the beginning of my speech, but I made it clear that the amnesty will apply to any future offences with effect from the tabling of the order. Any offences that could have arisen in future will not be applicable if the House approves the order. That is the key point.
I do not believe that any useful purpose would be served by raking further over the past. Now that an amnesty has been granted to the other categories of offender, it is only right that it should be extended to the one remaining category so that we may close this chapter. It is with this in mind that I commend the order to the House.

Mr. Peter Shore (Stepney and Poplar): I do not dissent from the general tenor of the Minister's remarks which are about the future of Zimbabwe, rather than the unhappy and recent past. But we must be clear about the purpose of this amnesty order. First, it is not an amnesty for the many offences committed and the unlawful political conduct sustained during the long years of UDI. Those offences have already been wiped out for the Westminster Parliament and the British courts by section 3 of the Zimbabwe Act. The same offences have been similarly amnestied in Zimbabwe itself by the Governor in one of his ordinances before the formal celebration of independence in Salisbury a month ago.
The amnesties to which I have referred were welcomed and applauded, because it seemed to us that both the unlawful acts committed by the illegal regime against Britain and the acts committed by persons and organisations seeking to overthrow that illegal regime had to be wiped out in the interests of creating a new climate of reconciliation and co-operation, both inside the new State of Zimbabwe and between all its citizens and the United Kingdom. That carried the total agreement of both sides of the House.
However, we are now dealing with a very different kind of offence. These are not offences that were committed during Mr. Smith's struggle to maintain European supremacy, nor in the struggle for liberation. These are offences, the primary motive of which was economic gain. These offences were committed by British companies engaged in trading—buying and selling goods to Rhodesia. They were offences against United Kingdom laws and their effect was to prolong and bolster the rebellion. These offences helped the illegal regime to sustain its oppression inside Rhodesia and its will and ability to defy British and inter

national sanctions. I remind the House that those sanctions were sustained and renewed by four successive Governments—Labour and Conservative—between 1965 and November 1979. I also remind the House that the international sanctions were, on British initiative and persuasion, invoked by the Security Council of the United Nations.
Of course, similar offences were committed by many other firms in other countries—far more than were committed by British firms—but given Britain's leading role in and responsibility for Rhodesia, these offences are not easy to overlook. An amnesty for this class of offence is very different from the amnesties that we have previously discussed and approved. An amnesty for British sanctions breakers does not serve any process of reconciliation inside Rhodesia or between Rhodesia and the United Kingdom. It simply allows those who have defied and cheated successive British Governments to get away with it.
This will have national and international implications for the future. Our own standing in the world community, and particularly in the Commonwealth, was seriously damaged by the evasion of sanctions by some of the oil companies in the way revealed by the Bingham report. That conduct has not been satisfactorily explained or properly dealt with.
The Government may argue, as the Attorney-General did in his statement on 19 December, about the great difficulties of pursuing the case, because of passing of the years, the vast volume of evidence to be assembled, the unavailability of key witnesses, the pressures of foreign Governments on nationally based subsidiaries, and the ambiguity of official policy. In spite of all that, the Government know that the reasons for their inaction have convinced neither the British people nor the international community. It is one thing to argue the difficulties of a particular prosecution, even though this was the most important of them all, and quite another to give a blanket amnesty to all offences, large or small, difficult or simple, as the case may be.
If this order is approved we shall lose credit abroad. While we pursue our national interests, we are not cynical in the way that many countries are, and we are not regarded as being so. There


are important domestic implications too. Indeed, where is the justice for those firms that have been prosecuted and punished during the past 14 years? To impose penalties on some firms for breaking sanctions and to waive penalties for other firms that have committed exactly the same offence flies in the face of natural justice.
More important still, surely, are the effects for the future. I do not know what further sanctions this country may need to impose; I hope that there will be none at all. But the invasion of Afghanistan and the continued unlawful presence of South Africa in Namibia may well require collective economic measures in the future. We all know that on 13 January this year Britain, along with many other countries, voted for sanctions in the Security Council against Iran over the continued illegal detention of American hostages in Tehran—a decision endorsed by the European Nine at the summit meeting in Luxembourg last week.

Mr. John Wilkinson (Ruislip-North-wood): Is the right hon. Gentleman suggesting the imposition of sanctions against South Africa because of the presence of South African troops in Southwest Africa? He has just made a most important statement. Will he clarify it?

Mr. Shore: No, I was not saying that. What I was saying was that Governments have to consider, in the context of this order, not only the use of sanctions against Rhodesia in recent years but the possibility of the use of sanctions against other countries and on other occasions in the future. It would be very foolish of anyone on either side of the House to dismiss that possibility in relation to other parts of Southern Africa or other parts of the world in relation to which we, along with others, collectively, believe that some forms of economic action may be necessary to achieve political changes that we think are right.

Mr. loan Evans: Let us take a hypothetical case. Let us suppose that next week the Government were to bring in an order imposing sanctions against Iran, for instance. Would it not be a waste of parliamentary time if a sanctions order went through this House and was endorsed by the United Nations

and we were then presented with an amnesty order? If we are to have a sanctions order against Iran, will there be a sanctions-breaking amnesty order to follow soon afterwards? That is what everyone in business will think.

Mr. Shore: Like a guided missile, my hon. Friend hits the target—not only because it is a very important point that he has made but because he also hits the target of what I am about to say.
I find it amazing that a Government who may well be on the eve of inviting Parliament to approve new sanctions should take the opportunity, tonight, of granting an amnesty for past offences. How do they think this order will be regarded by those who, in the future, may be expected to observe United Kingdom sanctions law? What effect will it have on the conduct of firms and individuals who might be involved?
Our view on this matter will come as no surprise to the Government. We objected to the foreshadowing of this order when the Lord Privy Seal made his statement on 15 April. Our view was expressed at length during the Committee stage of the Zimbabwe Bill last December. In addition to the merits of this matter we feel that we have a legitimate grievance against the Minister concerned, because during the course of the Zimbabwe Bill, when the Committee discussed the general amnesty arrangements that I described earlier, we took the opportunity to table an amendment to exclude from its provisions sanctions-busting by British firms. As the House will recall, we were informed that our amendment could have no such effect, because powers to amnesty United Kingdom firms had already been enacted in the Southern Rhodesia Act the previous month.
The Lord Privy Seal, who, I understand cannot be present tonight, sounded very pleased with himself when he made that revelation late that night. The truth is that he was not frank with the House. The Southern Rhodesia Bill was published and rushed through with quite extraordinary speed—a speed that made impossible the normal scrutiny that we give to Government measures. Furthermore, this power of making an amnesty for British sanctions breakers was buried within the convoluted language of clause 3 of the Southern Rhodesia Bill—a clause whose major purpose was to


stop, or at least suspend, those sanctions that had previouly been annually renewed.
The word " amnesty " was not even used in that clause. In expounding the Bill, both on Second Reading and in the Committee stage debate that followed, the Lord Privy Seal and the Under-Secretary were totally silent on this matter.
I do not think that Ministers have come out of this very well. I have no hesitation in recommending to my right hon. and hon. Friends and the House that they express their objection both to the manner in which this matter has been dealt with and, still more, the substance of the order, in their vote tonight.

Mr. Peter Emery: I listened with great care to my hon. Friend who presented this order and to the speech of the right hon. Member for Stepney and Poplar (Mr. Shore) from the Opposition Dispatch Box. Having considerable regard for the right hon. Gentleman, if I may say so, I think that he is making a bit of a meal out of a molehill. [HON. MEMBERS: "Oh! "] I purposely mixed my metaphors to drive home the point. They were just about as muddled as the arguments that the right hon. Gentleman used in presenting his case to the House.
Basically, the matter that the House must consider is what this order does and what its effects are on industrialists and those who might have broken the law or found themselves being prosecuted in the future.
It is important to point out that no case is before the courts, nor has any notice been given to any firm or individual that a prosecution will be brought. Prior to this order the Director of Public Prosecutions made it clear that prosecutions would not be brought or arise as a result of the Bingham report. If that had not been so, the right hon. Gentleman might have had a much stronger case to argue.
As no prosecutions are pending, it does not seem to me unreasonable for us to clarify the law. A complaint by an individual, not necessarily by the Government, might be brought against a firm under the existing law. Indeed, if that were the case, the information that I

have been given indicates that the DPP might have to indicate a case on a personal complaint—which would not happen once this order had been passed.

Mr. Frank Dobson: Surely the position is that any prosecutions under this sanctions order require the approval of either the Attorney-General or the Secretary of State for Trade. Therefore, there is always the opportunity for ministerial discretion to be exercised.

Mr. Emery: I should not necessarily wish to get into that argument, because I believe that most of the Ministers whom I have known in this position would have taken the advice of the DPP and not attempted to override him on this matter. That is certainly the case in relation to Government supporters.
The right hon. Gentleman greatly overstated the case when he said that if we passed the order we would lose credit abroad. One has only to go round Rhodesia to see the way in which most other nations were much more lax than the United Kingdom in the way that they dealt with sanctions against Rhodesia. I refer particularly to French, German and Japanese companies.
Until now, we have been much more stringent than other nations in the application of sanctions. We shall not prosecute anyone in the future, and we have no prosecutions before the courts now. Therefore, our credit will not be reduced in the eyes of the world. It would be a mistake to accept that argument.
The renewal of the sanctions order since 1965 has proved that sanctions are a very bad weapon for bringing pressure to bear on a nation. However much people may believe that sanctions have an economic effect on the country against which they are applied, the experience of Rhodesia proves that they do not work. Sanctions did not work in Rhodesia to anything like the extent envisaged by the right hon. Member for Huyton (Sir H. Wilson) when, as Prime Minister, he initiated the original sanctions order.

Mr. Tam Dalyell: As the hon. Gentleman holds these views, and as it is no secret that the Opposition will have a free vote, will he carry his views into the Division Lobby when it comes to sanctions on Iran?

Mr. Emery: I did not think that we were debating an order relating to Iran. Let us be quite clear that if it is necessary for the House at any time in the future to take action on sanctions against Iran, to help our allies, it may be necessary to show our solidarity with the Americans.

Mr. Nigel Spearing: Solidarity with the freedom fighters!

Mr. Emery: I suppose that the hon. Gentleman who referred to freedom fighters thinks that the hostages in Iran—

Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Let us not go too far down that road tonight.

Mr. Emery: I apologise, Mr. Deputy Speaker. I knew that I would get myself into trouble if I allowed myself to be wooed by the hon. Gentleman.
The Rhodesian experience has shown that sanctions as an economic weapon are not very effective. It has been proved over 14 years that sanctions in Rhodesia were not as effective as those who introduced them envisaged.
There has been a great flow of good will to Zimbabwe from all nations and all people. For the British Government to hold out as the only authority still willing to prosecute a company or an individual for a past action, when France, Germany and America would be unwilling to prosecute their nationals for a similar action, would be undesirable. It well behoves the British Government to take the steps that they are taking, and I hope that the House will pass the order.

Mr. Robert Hughes: I was fortunate and privileged to be invited by the new Government in Salisbury to share in the independence celebrations. Having been there, I am astonished at how well the country came through the many years of bitterness. There is far less bitterness than we expected. There are, however, tensions and undercurrents, and the new Government will need all the good fortune and assistance that we can give them to make a success of the new country.
We should not be under the misapprehension that the past is totally forgotten. The new Prime Minister, Mr.

Mugabe, and many members of the Government—members of ZANU and ZAPU—have called for a spirit of reconciliation. They do not want the past to cause friction. However, these people are bitter over the length of time that they had to fight for their freedom and the fact that we neglected to take a proper stand.
The amnesty is not a minor technical measure; it is very serious. From time to time people break the law for private gain. Private companies are the same as individuals. There are those who seek to bend the law, or go slightly outside it. Despite differences of opinion on sanctions, there is general agreement that the purpose of sanctions was to bring Rhodesia back to legality. Sanctions breaking was a deliberate conspiracy. It was a conspiracy not merely to break the law; it was a conspiracy against the aims of successive Governments and the people of Zimbabwe who were trying to win their freedom. We cannot readily set that aside.
I do not have time to rehearse all that emerged from Bingham. The whole sorry episode makes it clear that there was a deliberate conspiracy, which we have not yet got to the bottom of. We do not know the final details.
It is not only that the law was broken, which is itself a serious matter. I find the morality of the hon. Member for Honiton (Mr. Emery) curious. He appeared to suggest that there are different grades of sin, and that sin can be measured against the degree of sin shown by the fellow next door. I do not go along with that justification of sin. The hon. Gentleman sought to justify what happened in Britain by saying that others were a good deal worse.
Had there been no conspiracy to break oil sanctions and a proper oil embargo, the war in Rhodesia would have ended a great deal sooner and many more people, black and white, men women and children, would be alive today. In different parts of Zimbabwe there are people maimed, without legs or arms, in wheelchairs, badly scarred by the marks of war. Had there not been this conspiracy, which the Government now condone, these people would be running about, free, happy and healthy in wind and limb.

Mr. Bob Cryer: Will my hon. Friend reflect on the hypocrisy of


the Tories, who five years ago pursued a vendetta against the Clay Cross councillors, and the words of my hon. Friend—

Mr. Deputy Speaker: I am not sure whether the hon. Gentleman's remarks have anything to do with Zimbabwe.

Mr. Cryer: They have, Mr. Deputy Speaker.

Mr. Deputy Speaker: Then let us hear what the hon. Gentleman has to say.

Mr. Hughes: I appreciate and share my hon. Friend's concern about the Clay Cross councillors, but we are dealing with a different quality of argument tonight. We are dealing with the results of a conspiracy to break the law and to keep a racialist minority in control. There is no doubt that if the war had been ended much earlier by a proper application of sanctions, especially oil sanctions, there would have been far less bitterness than there still is in Zimbabwe.

Mr. Eldon Griffiths: I understand the hon. Gentleman's feelings. I know that over the years he has felt passionately about the war in Rhodesia. If the continuation of oil supplies enabled the white regime to last longer, that is one thing, but is the hon. Gentleman suggesting that the maiming and killing of people by terrorists was somehow the fault of the oil companies? Surely it was the fault of the terrorists.

Mr. Hughes: The hon. Member got it exactly right. This country's failure to deal with the oil conspiracy was responsible for the continuation of the war. I have never said in the House that one side was completely free from blame. On both sides incidents happened that ought not to have happened, but in my view the primary responsibility lay with those who carried out the greatest number of attacks, and that was the Smith war machine.
If we had managed to deal with this question earlier the new country would have had a much better start. I regret that it was not possible for my Government to act in a stronger manner, as I believe they should have. However, we are now providing a blanket amnesty not just for cases that are known but for those

that are not. This may be thought a small technical detail, but I always understood that the provisions of amnesties included the condition that offenders reported in. If one is giving an amnesty to illegal immigrants there is usually a time limit within which they have to report in to obtain their clearance. There is nothing in the order to provide that offenders who have not yet been discovered should report in that they broke the law and should apply for an amnesty.
This wide-ranging blanket amnesty has two serious implications for the future. I take the point made by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) that we shall soon be faced with the prospect of mandatory sanctions on South Africa. It may be recalled that there is a General Assembly resolution on sanctions. They are not mandatory, and no one is taking any notice of the United Nations' desire for economic sanctions against South Africa.
There are only two ways in which the people of Namibia and South Africa will gain their democratic rights. The ideal of one man, one vote is shared by almost every right hon. and hon. Member. I understand that many Conservative Members who supported the Smith regime often said that it was a matter of timing, and that they were not opposed to the general idea of democratic rule. The Namibian and South African people will get those rights only by fighting for them, as the Zimbabweans did, or as a result of some external pressure to make the South African Government remove themselves from their illegal occupation of South-West Africa and give democratic rights to its people.
The Government are showing that they have not learnt the true lesson of Zimbabwe. A people's desire for freedom cannot be extinguished. They cannot be prevented from fighting for it. They must be either supported or opposed. This Government have shown that they are against those people. To be fair, when they were in office, in the years between 1970 and 1974, they continued the sanctions order, often against the will of their own Back Benchers and often because of the support that they received from the Opposition. But they have never had any heart for sanctions. They were not against sanctions in principle. In view of events that are shortly to overtake us,


it would be curious if they were. They were really in favour of those against whom sanctions were applied—the minority regime in Rhodesia.
I am sorry that our history in Rhodesia and the new Zimbabwe is to be ended by this blanket amnesty. I shall certainly vote against it. It is ironic that at a time when press and Government announcements are preparing us, if not next week, the week after, for an Iranian sanctions order, we should be disposing of sanctions orders by a blanket amnesty. Will there be provisions in the Iran sanctions order that there will be no future amnesty? Will the public interest be interpreted as taking no proceedings against multinational oil companies? I hope only that those hon. Members who were opposed to sanctions over the years and now wholeheartedly support the amnesty will reflect, when they go to bed tonight, on the damage done to Rhodesia, now Zimbabwe, and that they will repent and feel shame.

Mr. Churchill: This order is designed to wipe the slate clean in respect of breaches of the Southern Rhodesia sanctions orders and to protect from further proceedings certain oil companies and other commercial interests. There will no doubt be certain Opposition Members, whichever way they vote, who will heave heavy sighs of relief when this order is carried. [HON. MEMBERS: "Who? Name them."] That would be indelicate. I think that Opposition Members are as aware as anyone else of those who connived at oil sanctions busting.
The House has made provision for an amnesty in respect of political offences within Zimbabwe that became effective on independence. My hon. Friend the Under-Secretary of State, introducing the order, stated that this was how the last category of companies or individuals not so far covered by the amnesty. I venture to suggest that there is one further category. It is, in fact, one individual I refer to the British subject, Mr. Bore-lace, who is currently detained in Zambia on charges of espionage, and who had a distinguished career in the Rhodesian Air Force as a pilot. He is to be brought to trial next week, and I understand that if

he is convicted he could face 25 years in gaol.
Will my hon. Friend confirm that there is no suggestion that Mr. Borelace has committed any act against the lives or property of any citizen of Zambia? Will he undertake that, at whatever moment the Government may judge appropriate, they will approach the Government of Zambia to join in the spirit of good will and reconciliation lying behind these various amnesty orders and show clemency towards this British subject?

Mr. Russell Johnston: I accept that within the territory of what is now Zimbabwe there must be a comprehensive amnesty covering all aspects of the war that was waged for seven years. The citizens of that new nation deserve the highest praise for reconciling deep differences. An amnesty is an essential and inseparable part of that.
To extend the amnesty to the United Kingdom and to the territories for which the United Kingdom remains responsible is a different proposition. Within what was Rhodesia a war was waged and the rules of war applied. For those supporting the Smith Administration, breaking sanctions was an extension of that war. I thought that they were wrong, but they were fighting for a cause. There was no war within the United Kingdom, there was a slate of peace and a lawful Government who at all times had the support of the Opposition. Governments of both parties imposed sanctions and called upon other nations to do likewise.
We are asked to exonerate people who breached sanctions not because of their beliefs but in order to make money. We are asked to do that by the party that prides itself, frequently justifiably, in having a special belief in law and order. To make the issue even more inconsistent and arbitrary, the amnesty applies only to those who got away with sanctions busting. Those who have paid fines get nothing. Apparently, it pays not to be caught. Those who were clever enough to evade the law get away with it.
The right hon. Member for Stepney and Poplar (Mr. Shore) and the hon. Member for Honiton (Mr. Emery) referred to domestic and other repercussions in the


event of other sanctions orders. I agree with the right hon. Member for Stepney and Poplar. I confess that when I was in what was then Rhodesia, with the hon. Member for Honiton, I thought that sanctions were largely ineffective and possibly counter-productive. I suspect that if we impose sanctions on Iran they will also be ineffective. However, for political reasons we might have to go along with an attempt to impose political pressure in co-operation with the United States.
That is not the point. The point is that the law should be respected. Government Members, of all people, would agree that that is so. If the law is breached, the law breaker should be pursued, sought out and brought to justice. That is the essence of the argument.
The hon. Member for Honiton referred to lax application by other countries. That is not an argument in this case, any more than it would be to the Clay Cross case. The whole matter is extremely depressing, as is the failure to do anything about the Bingham report. It boils down to the fact that if one is big and can conceal an unlawful action one can get away with it. That is not right, and cannot be right, and I shall vote against it.

11 pm

Mr. John Farr: I give full support to the order. The fact remains, despite what has been said by Opposition Members, that after 13 years of the illegal regime in Rhodesia the economy of that country was much stronger than it was at the beginning of the illegal regime. That was not the result of sanctions busting by firms in Britain, or any other country, but because sanctions forced Rhodesia to be much more self-reliant.
At the end of those years Rhodesians had been forced to produce many of the commodities that they had formerly imported automatically. As a result, the economy of the country was greatly strengthened.
I welcome the sanctions amnesty order because I regard the application of sanctions as being the height of wasteful futility in the past. To continue proceedings in the future would be equally wasteful.
There may, or may not, have been much sanctions busting by British firms,

but the fact is that in Zimbabwe today—and certainly in Rhodesia at the end of the 13-year period ol illegality, where formerly one would have found the majority of imports there to be of British origin—British manufactured goods have been almost phased out. The small quantity of British goods that did arrive in Rhodesia during that period arrived as re-exports of British goods from other countries. That was beyond our control.
During the 13-year period there were great increases in the import to Rhodesia of manufactured and finished goods from other countries, particularly from the Continent and Japan. There was at the same time a considerable decline in the import of British goods.
Now that Zimbabwe is independent the dragging on of proceedings in this matter could well be divisive in that country. So far as the trading partners of the illegal regime are concerned, British firms were involved only on a small scale and it is surely not right, after the independence of Zimbabwe, that we should continue these abortive proceedings when many other countries—far greater culprits than Britain in the export of goods to the illegal regime—have either abandoned their proceedings against the companies involved or probably never took proceedings in the first place.
If we were to be so ill advised as not to introduce this order tonight we would be in the unique position of having been the one country that lost its predominant trading position in those 13 years of illegality and at the same time the only country still pursuing a rather farcical vendetta against those few British companies that may have exported to the illegal regime.
I believe that if we do not support this order tonight the result will be a difficult and divisive situation for Zimbabwe. The best thing that the House of Commons can do in the interests of that country's great future is to support the order.

Mr. Bob Cryer: I shall be brief in speaking about this indemnity order and cut through some of the cant and hypocrisy that has been exhibited tonight by people who say that at one fell swoop this House should, in the interests


of decency, pass this order and let bygones be bygones without limitation or qualification.
It has been suggested that there could be conditions. It is not unprecedented for an amnesty order to require some sort of recognition by those who broke the law, by an expression of regret, that that was the case. There might be a limitation on the number of years. But there is none of that. It is total amnesty, totally unconditional.
I pointed out in an interjection that somewhat different standards were applied in the past. That is relevant, because I should like to quote what the Solicitor-General said on 4 August 1975. Then he did not talk about different standards or about an amnesty for some. Then he did not say, as he did in December last year, " If the question is big enough, if those people have retired and if it is complicated enough, there is nothing much we can do about proceeding with criminal matters, and, therefore, all that juicy list of known and respected people in annex III of the Bingham report can now rest easy because criminal proceedings will not be taken against them. That is on my decision and the decision of the Director of Public Prosecutions, but just in case there is anybody anywhere who is not quite covered, we have an amensty order to make the whole thing enshrined in a statutory instrument ".
However, in 1975, the hon. and learned Gentleman said:
 although we agree that justice should be tempered with mercy none of us should tamper with the rule of law or put it at risk. All people who offend the law, as these people have offended, should be treated alike. No hon. Member would quarrel with that proposition. Indeed, everyone would pay lip service to it".
The hon. and learned Gentleman said that at that time. My goodness, he is certainly paying lip service to it tonight. On that occasion, there were serried ranks of Tory Members standing up to say how sacrosanct, sacred and important the rule of law was, and that if the rule of law were applied differently, one against another, all our freedoms would break down, because it was the backbone of our liberty. The present Under-Secretary of State for Employment repeated that at great length and told my hon. Friend the Member for Bolsover (Mr. Skinner) how wrong he was to suggest that there should

be any difference. That was because those who were being criticised on that occasion were 11 Labour councillors, who it was claimed had broken the law.

Mr. Ivan Lawrence: Surely the hon. Gentleman is trying to find a wholly fallacious link between a situation in which reconsideration is given to the propriety of a conviction and a sentence—in circumstances where the party responsible for considering that reconsideration, namely, the Labour Party in the case of Clay Cross, had given an undertaking implicit if not expressed before the general election that when it got back into power it would let the Clay Cross councillors off the consequences of their wrongdoings—and the situation that arises here, in which certain persons and companies have not been charged because there was no certainty or probability that they would ever be convicted. Is not that an utterly fallacious comparison between those who have been convicted and those who have not been charged because there was no likelihood that they would ever be convicted?

Mr. Cryer: It was not a case of conviction, in any event. I am basing my argument on the words that Conservative Members put forward against the legislation that we introduced. On that occasion, Conservative after Conservative said that it was wrong. If it was wrong on that occasion, because 11 Labour councillors were involved, how can Conservatives defend what the Solicitor-General said in such specific and absolute terms, that:
 All people who offend the law, as these people have offended, should be treated alike "?—[Official Report, 4 August 1975; Vol. 897, c. 104.
A number of people have offended against the law. Annex III of the Bingham report was withheld from the House because the issue was treated as if it were sub judice. That is why the Government said that the report would not be published. The two examples are on a par.
The Government now say that a class of persons will be treated differently. As it happens, those people are not ordinary working Labour councillors but important people, who work for big corporations. They are extremely influential and will be given an official amnesty by means


of a statutory instrument. The hon. Member for Tiverton (Mr. Maxwell-Hyslop), in a previous debate, pointed out that if a person has retired he will be granted an amnesty for his criminal acts. The hon. Member asked whether the same terms would apply to elderly burglars.
Not only Opposition Members raised their eyebrows. That amnesty will be enshrined by statutory instrument. Double standards are involved. No amount of wriggling by lawyers who pop into the House from time to time will make up for the fact that those double standards apply. In 1975, the Solicitor-General made a claim. He should stick to that claim, and withdraw the order.

Mr. Eldon Griffiths: Perhaps we can turn to the subject of Zimbabwe and leave behind the issue of Clay Cross. However, the hon. Member for Keighley (Mr. Cryer) should understand the difference between a conviction for which punishment has been given and the possibility of prosecution. There is a great difference between the two cases.
My attitude to sanctions has always been practical. That is the right approach to apply, whether to Iran, Cuba or Rhodesia. I originally supported sanctions. I was led to believe by the Government of the day and their successors that they might work. Confronted with an illegal act, no Government could have stood idly by. Action was required. Sanctions were proposed. I listened to the evidence and was persuaded that they might work. However, having made a number of visits to Rhodesia I gradually came to the conclusion that sanctions were not working.
As my hon. Friend the Member for Harborough (Mr. Farr) said, sanctions did not make Rhodesia weaker. Indeed, if anything, they strengthened Rhodesia. I concluded that sanctions were of little value while an open border existed with South Africa. As they were not working, I saw no reason to penalise British firms when French and German firms were not being penalised. I shall adopt exactly the same approach when we consider Iran.
I find it difficult to support this order

in good conscience. I shall do so because, ultimately, the House must strike a balance. It is relevant to point out how that balance should be struck. I see certain inequities and grievances in the fact that several small firms—including some in my constituency—were pursued through the courts and punished in an absurd way. The punishment was out of all proportion to the nature of the offence.
I understand why those firms feel that they have been treated unfairly. They see larger firms getting off scot-free. Anyone who has read the Bingham report will probably agree that there is inequity in the fact that small traders were pursued and punished, while those who inhabit the inner recesses of Government, and who connived at those actions, will get away scot-free. To the extent that the House of Commons is now applying to one group of people rules that were not applied to other groups of people, I find this decision hard.

Mr. Peter Hardy: The hon. Gentleman is clearly on an important point, but will he comment on the suggestion that whilst some of these major companies must be about to breathe a sigh of relief at the order before the House it might be reasonable to suggest that they ought at least to be prepared to pay conscience money? Rather than the British taxpayer or poor countries in more difficult circumstances than those in Zimbabwe having to find the sums that the Government have promised, should not those oil companies, from their profits made from breaches of sanctions and subsequently, be prepared to make some payment? That would give cause for some relief on the part of the small companies that bore fines because they had not the wit to escape penalties in the way that the major companies did.

Mr. Griffiths: I hope that in the few words that I still have to say I shall come to the point made by the hon. Gentleman.
I said that, none the less, we have to strike a balance. Again, I put a practical point. Listening to what the right hon. Member for Stepney and Poplar (Mr. Shore) had to say in his carefully reasoned speech, I noted that he recognised the difficulties that Bingham,


among others, adumbrated about the business of pursuing all the sanctions breakers. As he rightly said, there are the problems of South African law applying to subsidiaries of international companies that were caught by that law. There are the many difficulties that the Director of Public Prosecutions had to recognise very fairly in the proposition that somehow or other, one could reach back into the past and find, through all the labyrinthine processes of commerce, ways and means of bringing prosecutions that would stick in the courts.
The hon. Member for Keighley appears not to understand that it is not enough to allege. What matters is to convict. There were some real practical problems involved in pursuing these matters through the courts to achieve conviction. Therefore, when I look at the present situation, on the one hand I recognise fully that there is a sense of inequity; on the other, I recognise the even greater inequity of attempting to pick and choose at this stage what types of prosecution could or could not retrospectively be brought.
Since he has recommended Labour Members to vote against the order, I should like the right hon. Member for Stepney and Poplar to tell me how, if he were in office, he would go about the practical problem of founding prosecutions in respect of the many complex matters that have been examined and that the Director of Public Prosecutions has said, in terms, he could not successfully bring before the courts. How would a. Labour Government, in practice, nursue the policy that he is recommending the House to adopt? I do not believe that he can do it.

Mr. Shore: I said that I was not satisfied with what the Attorney-General said about the reasons that swayed his judgment in terms of the Bingham report and the follow-up action of the oil companies, but I added that, irrespective of whatever conclusion one may reach on that particular and major case, I did not accept that that should be a reason for giving a holus-bolus blanket amnesty to all other cases, which, in my view, should be dealt with in the ordinary way by the Director of Public Prosecutions.

Mr. Griffiths: I am glad that the right hon. Gentleman said that, because that is precisely the point. Either we have a

blanket amnesty or we have no amnesty at all. The contrary to having a blanket amnesty would be the necessity to pick and choose among the many possible cases that could be brought. The one thing that the Director has made plain is that it is extremely difficult to look for any effective prosecution and conviction in the courts, and I respect his judgment.
A balance has to be struck. Overall it is in the best interests of the United Kingdom, and certainly those of Rhodesia, that we follow the Government's advice and wipe the slate clean.
Why is it that Mr. Mugabe, who has fought many a bitter battle and who now has the awesome responsibility of leading Zimbabwe into the future, can find it in his heart to take a much more generous and magnanimous view than Labour Members? I understand that Mr. Mugabe has made no representations for the sanctions legislation to be continued in Britain. He has made no request, offered no pressure, and made no demand that we should continue to fight the battle after the war is done.
That is what I find so surprising about the attitude of Labour Members. It appears that they want to continue fighting the war. They seem to feel that they will be deprived of a bone to gnaw on. Let us put behind us the tragedies, the law-breaking on all sides, the terrorism and the brutality. War is law breaking, and when a war is over there is merit in looking to the future and not the past.
Mr. Mugabe seems to be displaying a broad-minded statesmanship and generosity that eludes Labour Members. We should follow his example and put the past behind us. Let us look now to the future of Zimbabwe.

Mr. Frank Dobson: I shall be as brief as possible. The main reason that the Government have advanced for saying that they are justified in introducing the amnesty is that there are no prosecutions outstanding. That does not wash with me. There are two reasons why there are no prosecutions outstanding against oil companies. One is that the Director of Public Prosecutions proceeded with all the verve, elan and speed of a two-toed sloth and took no less than 15 months to consider the evidence provided by the


Bingham report, which was referred to him in September 1978. His views were endorsed by the Attorney-General.
Secondly, the Government, who say that they can introduce the amnesty proposal because there are no prosecutions outstanding, decided that no such prosecutions would be outstanding because there would be no prosecutions as a result of the Bingham report. They are merely justifying the decision that they made a few months ago.
Everyone accepts that the order will bring to an end a squalid episode in British history. It is an indication of the inability of the House to ensure that the decisions that it takes are carried out by the Government Front Bench of the day, its civil servants and the major companies. That is an important issue for hon. Members whether they supported sanctions or whether they did not. There should be no one in the House who can contemplate with equanimity the fact that the decisions of the House were defied for 15 years. Therefore, if there are no prosecutions, there should be a parliamentary inquiry into what happened, a tribunal of inquiry, or some sort of judicial inquiry.
If one considers the reasons put forward for not having a parliamentary or judicial inquiry, with the concept of double jeopardy, one sees that if people were invited to give evidence on oath to a body other than a court they would have prejudiced their position if court action were taken later.
The previous Government and the House were reluctant to give an amnesty to individuals so that they could freely give evidence to a tribunal of inquiry or parliamentary investigation. But every cloud has a silver lining. If this squalid order is passed tonight, one of the effects will be that the amnesty will have been given, and there is absolutely no reason why the House should not establish an inquiry itself, or set up a tribunal of inquiry to take evidence and find out why Ministers of the Crown, Members of the House of Lords, senior civil servants, and the present head of the Foreign Office were allowed to proceed and how they got away with it.
This will not be the last time that the House will consider introducing economic

sanctions. If they are to work in future we must sort out the rotten background to this lot in order to ensure that.

Mr. Paul Hawkins: I intervene only briefly to support the Government on this order. To continue another long drawn-out legal battle after the ending of this terrible war in Zimbabwe seems to be continuing bitterness, and this is not a good beginning for a young, new State.
Does anybody who opposes the order really believe that prosecutions of British companies would not drag in a number of citizens of probably every colour in Zimbabwe itself? Surely there must be links. If people are passing oil, others must be receiving it. That does not seem the right way to start a new country at its birth.
Finally, I cannot believe that until the Conservative Government came into office there was ever any chance of a settlement. Indeed, that was proved. There was no chance that the previous Prime Minister or the previous Foreign Secretary could bring about a settlement. Therefore, we would not have got the settlement until there was a change of Government, with people who were determined and who had the breadth of outlook to bring about that settlement. I congratulate my right hon. Friends the Prime Minister, the Foreign Secretary and Lord Soames on having added a page of great glory to this country's history. I believe that we can now hold our heads high abroad for many of the acts of this Government. The first of those acts was to set us on the right road in this respect. I only regret that I did not vote against sanctions at an earlier stage.

Mr. loan Evans: I heartily support my right hon. Friend the Member for Stepney and Poplar (Mr. Shore), who has shown that there are those in this House who have stated their principles since illegality, have stood by them, and will continue to do so until the end. We are discussing what was a United Nations sanctions order. When the Smith regime took the illegal action in 1965, and sanctions were imposed, it was because Members of this House went to the United Nations and asked for such sanctions against the regime. [Interruption.]
The hon. Member for Stretford (Mr. Churchill) has consistently been opposed to sanctions. I wonder whether the order will apply to him. He has suffered because of his attitude to sanctions. He was a Conservative defence spokesman. His party leader quite rightly said that he would have to leave the Front Bench. He would have been Minister of State. Perhaps he would have been Secretary of State, but because he voted against sanctions, the leader of his party, the present Prime Minister, ever consistent, as all of us in the House have heard, said " You must support sanctions." Of course, the hon. Gentleman is now sitting on the Back Benches. If the order goes through, shall we find him back on the Front Bench? Other things have happened, as we know. I mention that matter merely in passing.
This is a very serious matter. When we were in government, with the support of the Liberals and other parties, we were united in saying that United Nations sanctions should be maintained. But the Conservative Party has always been divided. What has been put to the House tonight is this: " Right. We have President Banana; Robert Mugabe is the Prime Minister; Didimus Mutasa is in the Speaker's Chair; Joshua Nkomo is the Home Secretary, and everyone is happy. That is the situation. The event has happened there, and all should be forgotten."
The point is that we stated that these sanctions should be maintained. The Conservative Party is the party of law and order. There were those of us who met the people who were struggling for freedom. When sanctions were imposed, Robert Mugabe and Joshua Nkomo were incarcerated in prisons. They were the ones who suffered. The people of Rhodesia as a whole suffered. The illegality could have been brought to an end many years ago if the sanctions that were imposed had been upheld, but now we know certain things about multinational companies in this country.
Many of us thought that the sanctions were being upheld. Those who visited Salisbury and saw all the British goods and the oil that was getting through knew that someone was breaking sanctions. But in the early days, of course, we thought that it was Fascist Portugal, which was installed in Angola and

Mozambique, that might be playing a part. But Angola and Mozambique went out of the picture, and then we knew that there was a conspiracy.
We in this House sanction public expenditure. The Conservative Party is concerned about public expenditure. We had the Beira patrol by the Royal Navy, preventing oil going into Beira. All right. Wrong has been done. Multinational companies have flagrantly, treasonably, broken the law laid down by this House and passed through the United Nations. The question is, do we rub the slate clean? I say that we do not.
I do not say that there should be massive prosecutions. My hon. Friend the Member for Holborn and St. Paneras, South (Mr. Dobson) put forward a suggestion. The economy of Zimbabwe has suffered, and that country needs economic aid. Let the multinational oil companies, which are making massive windfall profits at present, do something. The Government are setting up a committee of five to determine the salary of the chairman of the British Steel Corporation. Let us set up a Committee and try to get some recompense for the damage that has been caused by these multinational companies.
That is why I shall be with my right hon. and hon. Friends in voting against the order. I hope that the Government will not have the political impertinence next week to bring another economic sanctions order before this House. It is useless for them to talk about economic sanctions if, having argued over the years that penalties would be imposed on those who break the law of this land, they suddenly say that there shall be an amnesty order and all will be forgiven.
Therefore, I hope that all Opposition Members will vote against the order. We have been supporting sanctions all along. We want to see justice done and penalties imposed on those who have broken the law of this country.

The Solicitor-General (Sir Ian Percival): With the leave of the House. I should like to make a few comments on the debate. I am sorry to intervene when I know that some hon. Members want to speak, but by trying not to do so I have already left myself with little


enough time in which to answer at least some of the points, as I think I ought to do, in a debate of this importance.
I want to try to restore a little clarity. Some of the speeches have been confused, and I think that the hallmark, or the epitome, of that was the speech of the hon. Member for Keighley (Mr. Cryer), who quoted what I said in 1975—

Mr. Cryer: Mr. Cryer rose—

The Solicitor-General: I hope that the hon. Gentleman will bear with me for a moment. The hon. Member then compared that with something that he thought I said in December, which was not what I said but what was said by my right hon. and learned Friend the Attorney-General. If the hon. Gentleman cannot even distinguish between the two, it is not a good start. I agree with every word that my right hon. and learned Friend said, but it was not I who said it.
The hon. Gentleman's analogy was hopelessly wrong. What we were dealing with there were known, deliberate breaches of the law, incited and inspired by Members of this House on a promise of an indemnity afterwards. They were found guilty—in so far as the word " guilty " is appropriate.

Mr. Cryer: There were no convictions.

The Solicitor-General: There was a surcharge. They were found liable to a surcharge by the proper procedure, and they were then given an indemnity. It was a different matter.
A point of more substance arises on the phrase used by the right hon. Member for Stepney and Poplar (Mr. Shore). I acknowledge the sincerity of the points that have been made. There is room for genuine difference, which is why I wanted more than a couple of minutes in which to reply to the debate.
More than one Labour Member has used the words " blanket amnesty ", as if we are giving an amnesty to a whole lot of people who are known to have committed offences. That is not the background against which the order is introduced. Not only are no prosecutions pending; there is no evidence to suggest that any major evasion of sanctions by British firms or individuals has taken

place that has not been investigated by the authorities.
Of course, there was one aspect of the matter that did raise serious questions, did call for intensive investigation, and received it. That was the question of the oil transactions. I shall not go over the arguments. They were stated by my right hon. and learned Friend on 19 December. I agree with every word that he said, and I invite the attention of Labour Members to it.
I should like to make two points. It may have been a slip of the tongue, but the right hon. Member for Stepney and Poplar referred to this as a political decision, and as the Attorney-General's decision. It was not. The decision that was being reported to the House was the decision of the Director of Public Prosecutions. My right hon. and learned Friend said quite openly that he agreed with it and that he shared the responsibility for it, and so do I. Let us be clear what it was. The question of the Attorney-General's consent to proceedings never arose, because the person upon whom the duty is placed of deciding in the first instance whether proceedings could or should be brought, and whether his consent should be asked, reached the decision that was stated.
I should like to draw the attention of the House to the timing of the announcement of the decision on Bingham. That was on 19 December. By that time the Southern Rhodesia Act, under which this order is made, was in force. So this order could then have been made. At the same time, there had been a return to full legality. That was on 12 December. Accordingly, this amnesty order could have been made then. There was nothing to stop its being made. It could have been made before any decision on Bingham was announced, and the result of making it then would have been to preempt any question of decision on Bingham. There would have been no decision to make or to announce. However, as a deliberate matter of policy, that order of events was rejected and the decision on the oil transactions was dealt with first. That decision was announced by my right hon. and learned Friend in the House quite regardless of any question of amnesty. As the House will remember, he dealt at length with all the questions


that the Opposition wanted to put to him on it. I hope that the Opposition will bear that in mind. There was no question of anybody trying to duck any of the issues here. Bingham might have been ducked by taking that simple, different order of events. It was not.
The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) made some very snide remarks about the Director of Public Prosecutions. It just shows how a wrong inference can be drawn. If the DPP had decided a fortnight after the matter had been referred to him the Opposition would have said that he had not given it any thought. The police investigated the matter in great detail and counsel considered very carefully whether there was a prospect of success. Therefore, it did take time. It is typical that that should be turned against the DPP in that snide way by the hon. Gentleman.

Mr. Dobson: Would the Solicitor-General care to tell the House how many police officers were involved in the investigation on behalf of the DPP, and what were their ranks?

The Solicitor-General: No. I shall certainly not take time ascertaining that. The investigation was most thorough and was carried out with all the integrity that one would expect.

Mr. Dobson: Oh !

The Solicitor-General: It is no good the hon. Gentleman giggling about it. I knew that he would not like the answer. However, even if he wants to giggle about it, I give the House that assurance. I doubt whether other hon. Gentlemen would dispute that.
I have just recollected a point that the hon. Member for the Isle of Wight (Mr. Ross) raised. The customs authorities have taken no step in the condemnation proceedings. Those proceedings are civil, not criminal, and will now have to be dealt with by the representatives of the parties in the normal way. I should be happy to discuss it further with him, having had correspondence with him. How

ever, I do not think it right to take up the time of the House on that specific instance.

Now I want to deal in general terms with the substance of the argument against this matter. I accept that there may be different points of view about this, but I am trying to put the one against. Some Members of the Opposition made the error of seeing this matter too much in isolation and not as part of the broader picture. I want to stress that it is and must be considered as just one, the last of a series, of amnesties granted at the conclusion—and as the conclusion—of a unique series of events. I stress its uniqueness because of its importance.

The right hon. Member for Stepney and Poplar raised an important question about precedents, which was echoed by other members of the Opposition. I wish to deal with it. One of the most important features in considering the question of precedents is to set this one in its context. If one could say that this was likely to recur over and over again I would agree with him that it would be a precedent. However, it is of very great importance that it should be considered in its context. I remind right hon. and hon. Members of some of the particular features. We are trying to clear up a situation that resulted from 15 unhappy and difficult years. Happily, we are able to do so in an atmosphere of greater good will, hope and, indeed, promise than most of us would have dared to hope six months ago. Surely it must be right, in those circumstances, to wipe the slate clean.

The right hon. Gentleman referred to the other amnesties that have been granted and of which he approved. Those are departures from the principle that the law must always be applied—

It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).

The House divided: Ayes 136, Noes 87.

Division No. 287]
AYES
[11.45 p.m.


Adley, Robert
Baker, Nicholas (North Dorset)
Biggs-Davison, John


Alexander, Richard
Banks, Robert
Blackburn, John


Arnold, Tom
Benyon, Thomas (Abingdon)
Braine, Sir Bernard


Aspinwall, Jack
Berry, Hon Anthony
Brinton, Tim


Atkins, Rt Hon H. (Spelthorne)
Bevan, David Gilroy
Brittan, Leon




Brooke, Hon Peter
Hicks, Robert
Page, Rt Hon Sir R. Graham


Brotherton, Michael
Hill, James
Page, Richard (SW Hertfordshire)


Brown, Michael (Brigg & Sc'thorpe)
Hunt, David (Wirral)
Parris, Matthew


Bruce-Gardyne, John
Hurd, Hon Douglas
Percival, Sir Ian


Buck, Antony
Jessel, Toby
Pollock, Alexander


Butcher, John
Jopling, Rt Hon Michael
Proctor, K. Harvey


Cadbury, Jocelyn
Kaberry, Sir Donald
Rees-Davies, W. R.


Carlisle, John (Luton West)
Kellett-Bowman, Mrs Elaine
Renton, Tim


Carlisle, Kenneth (Lincoln)
Kilfedder, James A.
Rhodes James, Robert


Carlisle, Rt Hon Mark (Runcorn)
Kimball, Marcus
Rhys Williams, Sir Brandon


Clark, Hon Alan (Plymouth, Sutton)
Kitson, Sir Timothy
Rossi, Hugh


Clarke, Kenneth (Rushcliffe)
Knight, Mrs Jill
Sainsbury, Hon Timothy


Colvin, Michael
Lawrence, Ivan
St. John-Stevas, Rt Hon Norman


Cope, John
Le Marchant, Spencer
Shelton, William (Streatham)


Costain, A. P.
Lester, Jim (Beeston)
Skeet, T. H. H.


Dorrell, Stephen
Lloyd, Peter (Fareham)
Smith, Dudley (War. and Leam'ton)


Douglas-Hamilton, Lord James
Loveridge, John
Speller, Tony


Dover, Denshore
Luce, Richard
Spicer, Jim (West Dorset)


Dunlop, John
Lyell, Nicholas
Squire, Robin


Dunn, Robert (Dartlord)
Macfarlane, Neil
Stanbrook, Ivor


Durant, Tony
MacGregor, John
Stanley, John


Dykes, Hugh
Madel, David
Stevens, Martin


Eggar, Timothy
Major, John
Stradling Thomas, J.


Faith, Mrs Sheila
Marlow, Tony
Taylor, Teddy (Southend East)


Farr, John
Mather, Carol
Tebbit, Norman


Fenner, Mrs Peggy
Maude, Rt Hon Angus
Thompson, Donald


Fisher, Sir Nigel
Maxwell-Hyslop, Robin
Thorne, Neil (llford South)


Fletcher-Cooke, Charles
Meyer, Sir Anthony
Thornton, Malcolm


Fry, Peter
Miller, Hal (Bromsgrove & Redditch)
Waddlngton, David


Gardiner, George (Reigate)
Mills, lain (Meriden)
Walker, Bill (Perth & E Perthshire)


Garel-Jones, Tristan
Mitchell, David (Basingstoke)
Waller, Gary


Goodhart, Philip
Moate, Roger
Watson, John


Gower, Sir Raymond
Montgomery, Fergus
Wells, Bowen (Hert'rd & Stev'nage)


Griffiths, Eldon (Bury St Edmunds)
Morrison, Hon Charles (Devizes)
Wheeler, John


Griffiths, Peter (Portsmouth N)
Morrison, Hon Peter (City of Chester)
Wilkinson, John


Hamilton, Hon Archie (Eps'm&Ew'll)
Murphy, Christopher
Wlnterton, Nicholas


Hampson, Dr Keith
Myles, David
Wolfson, Mark


Hannam, John
Needham, Richard



Haselhurst, Alan
Nelson, Anthony
TELLERS FOR THE AYES:


Hawkins, Paul
Newton, Tony
Mr. John Wakeham and


Hawksley, Warren
Normanton, Tom
Mr. Robert Boscawen


Heddle, John
Page, John (Harrow, West)



NOES


Alton, David
Foulkes, George
Park, George


Anderson, Donald
Garrett, W. E. (Wallsend)
Parry, Robert


Archer, Rt Hon Peter
Ginsburg, David
Penhaligon, David


Atkinson, Norman (H'gey, Tott'ham)
Grant, John (Islington C)
Powell, Raymond (Ogmore)


Beith, A. J.
Hamilton, W. W. (Central Fife)
Prescott, John


Bennett, Andrew (Stockport N)
Hardy, Peter
Race, Reg


Booth, Rt Hon Albert
Hart, Rt Hon Dame Judith
Richardson, Jo


Bray, Dr Jeremy
Haynes, Frank
Roberts, Ernest (Hackney North)


Callaghan, Jim (Middleton & P)
Home Robertson, John
Robertson, George


Campbell-Savours, Dale
Homewood, William
Rodgers, Rt Hon William


Canavan, Dennis
Howells, Geraint
Rooker, J. W.


Cocks, Rt Hon Michael (Bristol S)
Hudson, Davies, Gwilym Ednyfed
Roper, John


Cryer, Bob
Hughes, Robert (Aberdeen North)
Ross, Stephen (Isle of Wight)


Cunliffe, Lawrence
Johnston, Russell (Inverness)
Rowlands, Ted


Dalyell, Tarn
Lestor, Miss Joan (Eton & Slough)
Shore, Rt Hon Peter (Step and Pop)


Davis, Terry (B'rm'ham, Stechford)
Lyons, Edward (Bradford West)
Soley, Clive


Dean, Joseph (Leeds West)
McElhone, Frank
Spearing, Nigel


Dixon, Donald
MacKenzie, Rt Hon Gregor
Stallard, A. W.


Dobson, Frank
Maclennan, Robert
Tinn, James


Dormand, Jack
McNally, Thomas
Walker, Rt Hon Harold (Doncaster)


Douglas-Mann, Bruce
Marks, Kenneth
Welsh, Michael


Dubs, Alfred
Marshall, Dr Edmund (Goole)
Whitehead, Phillip


Duffy, A. E. P.
Mellish, Rt Hon Robert
Wigley, Dafydd


Dunwoody, Mrs Gwyneth
Millan, Rt Hon Bruce
Winnick, David


Eastham, Ken
Mitchell, R. C. (Soton, Itchen)
Woolmer, Kenneth


Ellis, Raymond (NE Derbyshire)
Morris, Rt Hon Charles (Openshaw)
Young, David (Bolton East)


English, Michael
Morton, George



Evans, loan (Aberdare)
Newens, Stanley
TELLERS FOR THE NOES:


Evans, John (Newton)
Orme, Rt Hon Stanley
Mr. Walter Harrison and


Faulds, Andrew
Palmer, Arthur
Mr. James Hamilton


Flannery, Martin

Question accordingly agreed to.

Resolved,

That the Southern Rhodesia (Sanctions) (Amnesty) Order 1980, a copy of which was laid before this House on 23 April, be approved.

ZIMBABWE (INDEPENDENCE)

The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Richard Luce): I beg to move
That the draft Zimbabwe (Independence and Membership of the Commonwealth) (Consequential Provisions) Order 1980, which was laid before this House on 16 April, be approved.
When the Zimbabwe Act was enacted the Government took the view that it would be for the new Government of Zimbabwe to decide whether their country should accede to Commonwealth membership. The Act was therefore drafted on the basis that Zimbabwe would become independent outside the Commonwealth, but a power was included to enable the necessary modifications to be made in the event of a decision in favour of Commonwealth membership. The Zimbabwe Act also contains a power enabling the modification of enactments or instruments in consequence of Zimbabwean independence.
In the event, shortly after his election victory Mr. Mugabe asked the Governor to convey to the Commonwealth Secretary-General an application for Zimbabwe to become a member of the Commonwealth when it attained independence. The Government passed on this request with their wholehearted support, and on 9 April 1980 it was announced that Zimbabwe's application had been unanimously accepted by the Commonwealth members and that Zimbabwe would become the forty-third member of the Commonwealth. The main object of this order is to give effect in the law of the United Kingdom to Zimbabwe's Commonwealth membership. It also contains further provisions consequential upon Zimbabwe's independence.
The provisions of the order are necessarily of a technical nature. I shall, with permission, run through them article by article.
When the Zimbabwe Act was enacted last December, Southern Rhodesia was removed from the list in section 1 (3) of the British Nationality Act 1948, which contains a list of Commonwealth countries. The purpose of article 2 (1) of this order is to put the country back on that list under its new name. In the same way,

section 2 (1) of the Zimbabwe Act also provided that the status of British subject—that is Commonwealth citizen—should no longer adhere to anyone who enjoyed that status only by virtue of his citizenship of Southern Rhodesia before independence. Article 2 (2) of this order replaces this provision now that Zimbabwe is in the Commonwealth.
Schedule 1 to the Zimbabwe Act sets out transitional provisions concerning applications by persons with a Southern Rhodesia connection for citizenship of the United Kingdom and Colonies. Now that Zimbabwe is a member of the Commonwealth these provisions are largely unnecessary and article 2 of the order repeals two of them. What is retained is a provision of the British Nationality Act 1948 allowing the registration as United Kingdom citizens of certain descendants of persons having a particular connection with the United Kingdom. This provision will remain in force for one year. The number of people eligible is likely to be very small.
Schedule 2 of the Zimbabwe Act relates to the benefits of the status of British subject that were preserved for a limited period for Zimbabwean citizens. Now that Zimbabwe is a member of the Commonwealth, its citizens will be treated as British subjects and the special provision is no longer needed. The relevant paragraphs of the Zimbabwe Act are therefore repealed by article 4 of this order.
Articles 5 and 6 of the order make provision in connection with the Government of Zimbabwe assuming responsibility for the stock and debts of the Government of South Rhodesia. Mr. Mugabe has stated that his Government intend to honour the debts outstanding to Her Majesty's Government and to private creditors in Britain as a result of obligations incurred before the illegal declaration of independence in November 1965. Preliminary talks between officials of the Zimbabwe and United Kingdom Governments to discuss arrangements for the repayment of debts due to Her Majesty's Government are taking place in London this week.
The schedule of the order contains a number of consequential provisions. Paragraph 1 adds Zimbabwe to the list of countries that may be contributors to


the expenses of the Commonwealth Institute. Paragraph 2 relates to diplomatic immunity.

Dr. Alan Glyn: Am I to understand that the outstanding debt becomes the responsibility of the Zimbabwe Government, or do the British Government assume the responsibility for those bond holders—I am not one of them—who have waited for 13 years and who are looking not only for repayment but for future interest payment on loans that are not due to be redeemed?

Mr. Luce: I reiterate to my hon. Friend that Mr. Mugabe, on behalf of the Zimbabwe Government, has accepted full responsibility for all outstanding debts for the period prior to the declaration of UDI in 1965. One of the purposes of the discussions taking place this week is to make preliminary assessments with his Government about how to make satisfactory arrangements in that direction.
Paragraph 3 provides, in effect, that the Acts relating to evidence referred to in the order shall continue to apply to Zimbabwe. Paragraph 4 enables the continuance in relation to Zimbabwe of enactments concerning the reciprocal enforcement of judgments.

Mr. John Page: Will the Privy Council be involved as an appeal court for judgments in Zimbabwe in the future?

Mr. Luce: As far as I am aware, the answer is " No."
Paragraph 5 makes provision for the application to Zimbabwe of the Marriage of British Subjects Act. Paragraph 6 of the order has the effect of continuing the application of the Prevention of Fraud Act 1958 to Zimbabwe. Paragraph 7 adds Zimbabwe to the list of Commonwealth forces and Commonwealth countries. Paragraph 8 adds Zimbabwe to the list of those countries of registration whose ships shall not be treated as British ships for the purpose of the safety convention.
Paragraph 9 continues in respect of Zimbabwe the provisions of the Act and orders to which reference is made. Paragraph 10 makes provision for continuing

the double taxation relief order in respect of Zimbabwe. Paragraph 11 provides that the provisions of the Visiting Forces Act 1933 shall apply to Zimbabwe.
Zimbabwe is now widely welcomed as a new and full member of the Commonwealth. She has the good wishes of this country and the Commonwealth as she embarks on independence. Equally, the Commonwealth has every right to be proud of its role in helping bring peace and independence to that country and the settlement of a dispute which has bedevilled relations with the Commonwealth for so long.
While this order is largely consequential, it has, therefore, a wider meaning, of which I believe the whole House will approve.

Mr. Edward Rowlands: The hon. Gentleman rattled through the order at a fair pace. Towards the end, he acknowledged the importance and significance of the order and the fact that it makes the necessary and consequential provisions on the important and welcome decision of Zimbabwe to join the Commonwealth. That decision, I hope, is welcomed by hon. Members in all parts of the House. It is important in terms of the relationship not only between Zimbabwe and this country but between Zimbabwe and other members of the Commonwealth.
The decision is welcome not only for its intrinsic value but, as the Under-Secretary of State stated, for the role of the Commonwealth in the whole process of the settlement.
It is worth reminding ourselves of that role as we welcome Zimbabwe to the Commonwealth.
The prospect of a Commonwealth conference last year had an important effect on the Government's thinking about how to handle Rhodesia. The imperial poet, Rudyard Kipling, wrote " If ", but if no Commonwealth conference had been held in 1979, if the Government had rushed headlong towards endorsing the fatally flawed internal settlement, would we have reached the present settlement? The prospect of the Commonwealth conference at Lusaka was the important brake and obstacle to an endorsement of the internal settlement.
When the Prime Minister got to Lusaka the basic outlines of the subsequent Lancaster House settlement were shaped. The Commonwealth Heads of State helped to shape the outlines and basic structure of the Lancaster House settlement. The roles of the Commonwealth Secretary-General and the secretariat were crucial at Lancaster House when negotiations became deadlocked.
The Commonwealth had a role in the processes that led to the elections. It provided a monitoring, peace-keeping force. Kenyans and Australians joined Britons in the peacekeeping role. The Commonwealth was also important in establishing that the elections were fair.
In acknowledging the importance and significance of Zimbabwe joining the Commonwealth, we must acknowledge the important and unique role that it played in coming to an ultimate settlement. We pay tribute to the Commonwealth, and therefore, welcome the fact that the new Zimbabwe Government wish to join the family of nations that has looked, and will continue to look, for constructive ways of bridging the gap between the Third world and the developed world and to examine the part that it can play in economic and political relationships. We welcome the order.
I have to ask again about the nationality provisions and the effect of section 1(3) of the British Nationality Act on Commonwealth citizens. The Under-Secretary spoke of a small group of people who for 12 months have the right to enter this country. I assume that he was talking about the unrestricted right to enter this country. Who are those people? What type of people are they? We would welcome clarification of that point.

Mr. Luce: May I correct the right hon. Gentleman on one point? We are speaking of the right to acquire United Kingdom and Colonies citizenship, as opposed to the right of abode in this country.

Mr, Rowlands: Ah, so it is not in fact the right of entry. That is important and relevant. Anyone who gets involved in the labyrinthine relationships of the nationality and immigration legislation needs to know that. What the hon. Gentleman has said is important. We are dealing, then, with the rights of citizenship of the United Kingdom and Colonies, as is the case with the Falk

land Islanders. However, I understand that that does not confer the right of abode and the right of automatic entry. I am grateful for the clarification provided by the hon. Gentleman.

Mr. Ivor Stanbrook: If the hon. Gentleman will allow me, may I point out—no doubt I shall be corrected if I am wrong—that half the European population of Zimbabwe at this moment consists of citizens of the United Kingdom and Colonies? They possess British—that is to say, United Kingdom—passports with the full right of abode in this country. No doubt my hon. Friend was talking of those people who may well be Commonwealth citizens and who may be entitled—under certain circumstances—to apply for citizenship of the United Kingdom and Colonies. But that is a different class. Surely, we have not in this legislation changed the existing right of nearly half of the British population of Zimbabwe to come to this country without let or hindrance.

Mr. Rowlands: The hon. Member should either make a speech himself or press the point. I do not answer from the Government Dispatch Box on this point. I am sure that the Under-Secretary, if he feels that there is need for further clarification will say what is the exact position of the large number of Europeans who have United Kingdom passports in the light of the changes brought about either by this statutory instrument or by the independence of Zimbabwe.
I was interested in article 5 of the instrument, which deals with outstanding debts. The Under-Secretary referred to negotiations presently going on in Zimbabwe. One hopes that if agreements are reached we shall not find that the finance for aid projects that has been offered to Zimbabwe will be used to pay off bondholders or stockholders. That money for aid is essentially for the development of Zimbabwe itself. Some hon. Members wish that that were not so, but the Opposition regard those offers as an obligation, on behalf of overseas aid from this country, to the new State of Zimbabwe.
It is, therefore, with great pleasure after the arguments in the debate on the previous order, that the Opposition unreservedly welcome this order, which


admits the new and independent State of Zimbabwe, with whom we hope the United Kingdom and the Government will maintain the closest and warmest relationships. We also hope that Zimbabwe will develop close and warm relationships with other members of the Commonwealth.

Mr. Julian Amery: The old self-governing colony of Southern Rhodesia was, I suppose what might be called a country member of the Commonwealth club, in that its Prime Minister was admitted to the Commonwealth conference. The same was true of the Central African Federation.
I welcome the decision that Zimbabwe should become a full member of the Commonwealth, but in view of the speeches that I have made during the long saga of Rhodesian affairs, I think I should perhaps briefly explain why.
I first became involved in this problem as far back as 1951, when Mr. Jim Griffiths and Mr. Patrick Gordon Walker, then respectively Secretaries of State for Colonial Affairs and Commonwealth Relations, encouraged me to join a parliamentary delegation to investigate the pros and cons of a Central African Federation. In those days, both of them—they were still in office—were favourably inclined to the idea of a federation. That they changed their minds afterwards is another matter, which I need not go into. I was in a party that included Mr. Stanley Evans and Bill Coldrick from the other side and Mr. Archer Baldwin from our side. We came back strongly committed to the idea of a Central African Federation on economic grounds—that the economic powerhouse of Zambia, the manpower of what later became Malawi and the agricultural and financial expertise of Southern Rhodesia should be linked together.
I suppose we played our own small part in persuading Sir Godfrey Huggins and his colleagues to forgo the option of full independence as a Dominion, which in 1951 was within their grasp, to play a part in the Central African Federation instead. I saw with regret that a Conservative Government dissolved the federation, and when I see that Zambia has

declined into a ramshackle dictatorship and an economic slum, I see no reason to change that view. It was a direct result of the break-up of the federation, as was UDI. UDI followed because we broke up the federation, giving independence to Malawi and Zambia but not to Rhodesia.
I have always thought that UDI was a serious tactical mistake on Mr. Smith's part, but I think that historians will perhaps be a little more generous than we were in the House of Commons at the time. The years of UDI were not entirely wasted, as one of my hon. Friends remarked in our earlier debate. Much happened in those 15 years that was positive and constructive. I was going to say that hon. Members below the Gangway—but there are none there now—who advocate protectionist policies might learn some interesting lessons from the impact of sanctions on Rhodesia. It mobilised the human and material resources of the country like nothing else. What had been an entirely primary economy when I first saw it in 1951 became, by this year, a highly sophisticated and largely industrialised economy. Much of that industrial progress in machinery and other things will endure.
I am told that the only gaffe that my noble Friend Lord Soames was guilty of was when he described the wine manufactured in Rhodesia from imported grapes as " weasel piss ". Not having had his advantage of knowing of that latter drink, I can at least confirm that Rhodesian wine is not very drinkable and will probably be extinguished in the future.
But the ingenuity of human beings and the fact that profits were not remitted provided the ability for this enormous development of Rhodesian industry, and that development called into being a racial partnership that had not previously existed. That was intensified by the civil war, because in the civil war the white community and the army and police had to rely more and more on the co-operation of the black community. It was that which brought about the initial success and popularity of the so-called internal settlement.
As we contemplate the prospect of Zimbabwe joining the Commonwealth it is worth remembering the reasons that brought nationalist leaders such as Bishop Muzorewa and Mr. Sithole to join the


internal settlement. They came to the conclusion that co-operation with the whites was preferable to the kind of one-party system that they had seen in Zambia and Mozambique. They concluded that South African influence was less dangerous than the lengthening shadow of Soviet imperialism. Perhaps Mr. Mugabe is thinking along similar lines.
Just before my right hon. Friend the Prime Minister and the Foreign Secretary went to the Lusaka conference I ventured to tell them that they had an opportunity that might never arise again. The poet Dante described the greatest sin in his category of sins as " the great refusal ". He referred to the sin of refusing to take advantage of a great opportunity. I proposed that we should recognise Bishop Muzorewa and his regime and that we should lift sanctions. In my judgment, the moral case here was impregnable. The constitution from which he derived his authority had been endorsed by Lord Home and the right hon. Member for Huyton (Sir H. Wilson). They accepted that it conformed to the six principles. Lord Boyd described the election that had brought Bishop Muzorewa to power as free and fair.
I accept that that recognition might not have been universal. Yet the American Senate had instructed President Carter to recognise Bishop Muzorewa as soon as we did. Moreover, it is difficult to believe that other industrial countries, which had been much sharper than Britain in breaking sanctions, would have been slow to establish diplomatic relations. The war might not have stopped immediately, but we know more clearly than six or eight months ago that the Patriotic Front's host countries could no longer support it. Tanzania was exhausted by its war with Uganda. President Kaunda was on his knees, asking Bishop Muzorewa to reopen the railway line to prevent not just bankruptcy but starvation. President Machel was deeply in debt to the South Africans who were running Mozambique's railways and harbour.
If Her Majesty's Government had taken the opportunity, we might have had a pro-Western, pro-democratic—in the sense of a pluralist democracy—and pro-capitalist regime in Zimbabwe. The example that it set would have limited and perhaps reversed the tide of Soviet

imperialism in Africa. The Government decided to reject that opportunity. They wanted to meet the requirements of African opinion. Yet only Nigeria could have harmed us, and it did so anyway. Beyond this the Government sought to avoid any confrontation with the Soviet Union in Southern Africa. Little did they recognise that Soviet eyes were already focused on a different target—Afghanistan.
The Lancaster House conference destroyed Bishop Muzorewa's prospects. A skilful and ruthless combination of persuasion and arm twisting led him to admit that the election, which Lord Boyd had found fair, was unfair. He admitted that his constitution, which Lord Home and the right hon. Member for Huyton had agreed conformed to the six principles, did not. He was persuaded to step down from the premiership. His compliance was not even rewarded with a total lifting of sanctions.
The ensuing election resulted in a predictable outcome, along tribal lines. The whites voted from for Mr. Smith. The Ndebele voted for Mr. Nkomo. The Shona, who have always advocated consensus, chose Mr. Mugabe as their consensus candidate. That resulted in a Patriotic Front coalition. The Government had not expected that result. The sorcerer's apprentices in the Foreign and Commonwealth Office had not predicted that result. I should be hypocritical if I joined in the general acclaim. Instead of a pro-Western, pluralist, private enterprise regime, we have one which at best will be non-aligned and may be inclined, so many of its more sympathetic commentators say, to one-party Government and which looks to a planned economy in the future.
There is an agreeable British characteristic of making the best of our difficulties. Looking at our history books, the retreats to Corunna and from Dunkirk appear almost as victories. We must learn to live with the consequences of this self-inflicted defeat. We must make the best of it. I, for one, believe that we can make a good deal of it. There are many positive elements in the situation, and it is to those that I turn before I sit down.
Mr. Mugabe has certainly made generous speeches, which show a magnanimity that many had not expected from him. His early actions in support of the Armed


Forces and the Civil Service have been statesmanlike. He faced great problems. Some are inherent in the situation—economic, social and tribal. Some are inherent in the expectations that he and Mr. Nkomo inevitably raised in the years of the war. His room for manoeuvre is limited.
It is said that Mr. Mugabe is a Marxist. I have learnt from impeccable Marxist sources—as there has been some public confirmation of this—that his links have been as much with Marshal Tito in the past, and President Ceauseseu and the Chinese Government, as with the Soviet Union. So there is at least a chance that whatever he does on the internal front he may not be a pawn in the hands of the Soviet Union.
It seems right that we should help him with the training of his Army and his Civil Service and should give him as much economic aid as we can reasonably afford. It is also right that we should support his joining the Commonwealth. He will not be the first Commonwealth leader to shoot his way into the club or, indeed, to profit from it. But here I offer a word of caution.
Britain's main economic and strategic interests lie in the Republic of South Africa. Had we been able to support the Muzorewa Government, as I should have liked, we would have had a country aligned with the West and at any rate reasonably friendly to South Africa.
Mr. Mugabe's position is rather different. He is non-aligned, by his own declaration. Material considerations will dictate co-operation with South Africa. Ideology and sentiment may pull the other way. He may even find the need to export some local discontent, which might bring him under pressure to turn Zimbabwe into a platform for operations against South Africa. We must at all costs avoid our support for the new Zimbabwe drawing us into further anti-South African policies and attitudes. Here Namibia will be a test.
I can understand that my right hon. Friends have a public relations interest in claiming what has happened in Zimbabwe as a success, but I see no reason why they should try to inflict a similar defeat upon South Africa. Our task must be to try to foster good relations between

Zimbabwe and South Africa, and here I think that the omens are reasonably good.

Mr. John Biggs-Davison: Is my right hon. Friend aware, and is it not a hopeful sign, that South Africa is one of the countries exhibiting in a trade fair now taking place in Salisbury?

Mr. Amery: I was about to say, in support of what my hon. Friend said, that the omens are rather good. Both Mr. Mugabe and Prime Minister Botha appear to be animated by realistic and pragmatic views. What my hon. Friend said about the trade fair bears that out. Indeed, we have seen very good co-operation developing between Mozambique and South Africa. If we are to help in this process, we must try to match our aid to Zimbabwe by mending our fences with South Africa.
It is time to end the embargoes—for example, the sale of arms—that we have imposed upon South Africa. It is time to try to renew our defence ties with it. They will become increasingly important in view of the shift of the international crisis to the Indian Ocean. In the mounting international crisis the importance of South African resources and the Cape route loom ever greater. Our aim must be to defuse the potential confrontation between Zimbabwe and South Africa and to help Zimbabwe and South Africa—

Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Order. I have been in the Chamber for only a short time, but I find it difficult to relate what the right hon. Gentleman is saying to the order.

Mr. Amery: I am drawing my remarks to a close. I was attempting to explain why I support the order and the entry of Zimbabwe into the Commonwealth. I was seeking to say that it is our task, now that Zimbabwe is a member of the Commonwealth, to defuse the potential confrontation with South Africa and to help Zimbabwe and South Africa to live if not at once in harmony at least in mutual forbearance and presently in growing understanding.

Mr. Tom McNally: If anyone had to make the speech that we have just heard, it was right and fitting that it was the right hon. Member for Brighton, Pavilion (Mr. Amery) who did


so. The right hon. Gentleman has shown consistency over the years. It is only sad that after the lessons of the past few months he should still have an approach to the problems of Southern Africa that is so dangerous and shortsighted. I urge his right hon. and hon. Friends on the Treasury Bench to disregard his advice now as they have done over the past few months.
I cannot go back as far as the right hon. Gentleman in the history of Southern Africa, but I know about the aid and comfort that he and others of his persuasion have given to rebellion. They have helped to bring about in Southern Africa the tragedy of Rhodesia-Zimbabwe.
It was in 1975 that I accompanied Lord Greenwood to Rhodesia. I do not think that I am indulging in prior memoirs when I say that when we met Mr. Ian Smith he said " I think that our little game of UDI is drawing to a close ". Sadly it was nearly another five years and many more thousands of deaths before that little game drew to a close. As my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) said, we pay tribute to the Government for the skill with which they have handled events in Zimbabwe in the past few months. However, we should not forget the aid and comfort and the folly and foolishness of the advice which came from many Conservative Members below the Gangway and which prolonged the little game of UDI.
As you rightly said, Mr. Deputy Speaker, we are discussing a specific order that gives to the new State of Zimbabwe the happy status of Commonwealth member. About 10 years ago an article appeared in The Daily Telegraph which was signed by a Conservative. It denigrated and cheapened the role of the Commonwealth as a factor in British foreign policy. That Conservative has never been positively identified, although an informed guess is that he does not now take the Conservative whip. It is a happy thought that a decade later he has been proved wrong, because the Commonwealth played a decisive role in bringing about a peaceful settlement that both sides of the House believed was almost impossible.
I spent almost five years in various capacities looking at the problem of

Rhodesia. I have no hesitation in paying tribute to the skill with which the present Government guided us through the last few months. There were many personal problems—for example, the capacity of Joshua Nkomo to accept a subordinate post after 20 years, and the tensions of tribal rivalry in that country.
How do we go forward from here? This order gives us a reasonable starting point. I make two specific points. Let us make sure that aid and development are really aid and development. Let them be about nation-building, and not as the technicians want—to pay off one interest or another.
There are others who have debts to the new nation of Zimbabwe, not least the oil companies. If the new nation approaches its debts with integrity, let us hope that the oil companies will apply a little integrity as well. For God's sake let us not now breathe a sigh of relief and think that we can wash our hands of Southern Africa. It is still an area of vital importance to Britain. How can we play our hands? Let us not alienate, let us build. Aid and development will play a key part in that.
The new Zimbabwe and its Commonwealth partners in Botswana and Zambia will need our diplomatic, economic and military support for some time. I hope that paragraph 11 of the order means that the Government are committed to positive thinking about the terrible problems of the new nation in integrating the armed forces. I hope that this will be part of a long-term commitment to training, equipment and the general wish to give stability. There are too many soldiers in that country; too many people who have grown up being armed soldiers. They will need help to return to civilian life.
I urge the Government to give us an assurance that in aid and military assistance this will not be a short-term programme, but real long-term assistance, not only to Zimbabwe, but to the regional concept which includes her Commonwealth partners.
Finally, I take up the point that the right hon. Member for Pavilion made at the end of his speech. It has come home to me time and time again as I have worked with and through Africa over the years that the capacity of the African


to forgive is almost inconceivable to the European. A decade ago I was involved in the civil war in Nigeria, when Cassan-dras were saying that it would take a generation to heal the wounds. It did not happen. Even in the last few weeks, the Zimbabweans have been showing a capacity which, perhaps, we Europeans find inconceivable.
If I were to ask the right hon. Member for Pavilion to use his undoubted voice and influence in South Africa, I would ask him to say there " Learn the lesson of Zimbabwe. Learn that there is a peaceful way to change. Learn that the Africans have a capacity to accept change without recrimination." If he will use his voice for that, he will really be contributing to peace in Southern Africa, rather than resurrecting ideas of NATO involvement in Southern Africa and British involvement with arms to South Africa. If he goes that way, he will be treading the path of folly of the last 15 years. If he tells the South Africans that there is a peaceful way to change, he will be making a real contribution to British interests in that continent and to the peace of that continent.

Mr. John Biggs-Davison: I thought that the speech of the hon. Member for Stockport, South (Mr. McNally) was somewhat sanctimonious. I think that he is the first speaker in the debate to bring party feeling and animosity into a debate in which I should have thought that we would all wish to welcome—

Mr, McNally: That is pretty sanctimonious for a start.

Mr. Biggs-Davison: Zimbabwe—

Mr. McNally: Twenty years; not 20 minutes.

Mr. Biggs-Davison: Does the hon. Gentleman wish to intervene?

Mr. McNally: I would think that a record of sanctimoniousness applies over 20 years, not 20 minutes.

Mr. Biggs-Davison: I thought that the hon. Gentleman was picking me out as a sort of desperado rather than as someone who is sanctimonious. I thought that he was blaming my right hon. Friend the

Member for Brighton, Pavilion (Mr. Amery) and some others of us below the Gangway for the unhappy history of Rhodesia since UDI.
If we are to go back and apportion blame for the bloodstained arrival of Zimbabwe at independence, we might spare a thought for two somewhat discomfited politicians in Zimbabwe now—namely, Mr. Nkomo and Mr. Sithole. If any two individuals are responsible for the unhappy course of events, it is those African leaders, who having accepted a constitution in London in 1961, then went back on it. That was a constitution which would have led Southern Rhodesia to African majority rule without the disturbance and bloodshed which have occurred.
UDI flowed from the abandonment of the Central African Federation and the failure of an earlier British Government to give Southern Rhodesia the independence conferred on the two other units of the former Federation.

Mr. Deputy Speaker: Order. Nothing about the failures of British Governments has anything to do with the order. Perhaps the hon. Gentleman could relate his remarks to the order.

Mr. Biggs-Davison: With respect, Mr. Deputy Speaker, I would not have followed this line, but would merely have made a brief tribute to Zimbabwe as it enters the Commonwealth, had not the hon. Member for Stockport, South, made an attack upon my right hon. Friend the Member for Pavilion and others of my hon. Friends. I should have thought that if it was right for an hon. Gentleman to depart from the order in order to make a personal attack, it would be in order to reply to that.

Mr. Deputy Speaker: Order. I think that the reverse of that coin would be commended.

Mr. Biggs-Davison: I welcome Zimbabwe as a fellow member of the United Kingdom of the Commonwealth. Zimbabweans of all races have always felt themselves close to Britain and, through Britain, to the Commonwealth. Although I did not share the view of Opposition Members about what has happened since UDI, it was a matter of deep regret to me when Southern Rhodesia broke with the Crown and set up a republic which


owed more to South African than to Commonwealth inspiration. That was a matter of deep regret to me, and I told Mr. Ian Smith so.
Zimbabwe has now arrived in the Commonwealth, after great suffering and much bloodshed. I thought that those of us who were able to witness the independence celebration, whether there, in Salisbury, or on television, must have been particularly impressed by the spectacle of Mr. Mugabe and General Walls walking together to the memorial flame to those who died, on two sides, in a desperate war.
I agree with one remark made by the hon. Member for Stockport, South. It is that there is this wonderful capacity for forgiveness and reconciliation, and all of us in this House welcome that. I hope—and perhaps when my hon. Friend replies to the debate he will tell us when it will happen—that soon we shall find Zimbabwe House in the Strand reopened and a high commissioner here in London.
I shall now sit down, only adding my welcome to the welcome that has been expressed by other hon. Members to Zimbabwe on its arrival in the Commonwealth. May this Commonwealth membership help to maintain the independence of that country, bearing in mind that Soviet imperialism has already destroyed the independence of more than one African State.

Mr. Russell Johnston: I shall keep the House only for the time that it takes to utter three sentences. I simply wish to place on record, as others have done, the welcome that we on the Liberal Bench give to this order and to the arrival of Zimbabwe in the Commonwealth.
I do not think that at this late hour there is any point in rehearsing history, although I understand the desire of, and the tolerance shown by the Chair to, the right hon. Member for Brighton, Pavilion (Mr. Amery) to express his views. I shall not argue with him now. I do not think that we should argue just now.
I am sure that the hon. Member for Merthyr Tydfil (Mr. Rowlands) will remember this, because we were there together. To sit, if I remember rightly, on some sort of concrete steps in a great

open-air stadium in Gwelo and listen to Joshua Nkomo saying
 I believe that we must build a colourblind Zimbabwe 
was an enormously emotional experience. I hope that it works, and I wish it well.

Mr. James Kilfedder: In November 1965, when the then Prime Minister of Rhodesia, Mr. Smith, made the momentous, and I think tragic, decision of UDI, the Prime Minister here, the right hon. Member for Huyton (Sir H. Wilson), was not able to make a statement in this House despite the importance of that declaration. It was discovered that the only way in which he could intervene in the proceedings in the House was to ask the hon. Member who had the Adjournment debate to surrender that debate to him.
I was that hon. Member. I had the Adjournment debate that night. I gladly, of course, handed over my Adjournment debate to the then Prime Minister. I have no regrets about it, even though he did not even have the courtesy to thank me at the time, and even though he then made that rather boastful statement that UDI would end in a matter of days rather than weeks. Sadly, it has lasted a long time. Many lives have been lost in Rhodesia. However, every Member of Parliament welcomes Zimbabwe now as a member of the Commonwealth. The speeches made by politicians in Zimbabwe are very heartening. It seems that Zimbabwe has a role which will not identify it with the Russians. It will not create conflict with South Africa.
The Prime Minister of Zimbabwe has much to learn from Dr. Banda, the lifelong President of Malawi, a country which, when it was granted independence, became a member of the Commonwealth. When it was handed over by this country to the people of Malawi, it had few resources, little in the way of roads and poor prospects. Yet by dint of hard work by the people of Malawi it prospered, law and order was enforced and Dr. Banda engaged—and still engages—in commercial links with South Africa. I hope that Zimbabwe learns from what happened in Malawi. Zimbabwe has great riches. The people have great potential. I am sure that it will play a distinguished and useful part in the history of the Commonwealth.

Mr. John Wilkinson (Ruislip—North-wood): I had thought that the New Hebrides Act proved the ultimate nonsense of British citizenship law, but, quite honestly, this order fulfils that role. It restores, by virtue of Zimbabwe's membership of the Commonwealth, to citizens of Zimbabwe resident in this country the rights and privileges of British subject-hood that they would have enjoyed had Zimbabwe not become independent. The consequential provisions of this order entail the addition of another 8 million British subjects to the hundreds of millions of other British subjects around the globe, who, if they became resident in Britain, would be able to join the Armed Forces and police here, or vote, once they got on the electoral register. Surely those rights and privileges appertain more properly to a dependent relationship to this country than to independence. Surely these rights and privileges should be consequent upon residence for a stipulated period here rather than the historical accident of an election and the emergence of an internationally acceptable Government in Zimbabwe many thousands of miles away from these islands.
In opening, the Under-Secretary referred to one category of persons who could register as United Kingdom citizens for a year after independence. I presumed that these were people who would wish to become United Kingdom citizens because they had some family connection with Britain. I had assumed, therefore, that they were perhaps either, as of the passing of this order, Commonwealth nationals and patrial, or others who had a close family connection. We see that paragraph 3 of schedule 1 to the Zimbabwe Act 1979 is to be retained. That schedule apparently provides an open-ended entitlement to registration as a citizen of the United Kingdom and Colonies for all Zimbabwe citizens and any of their minor children as long as their applications for registration are received within a year of independence.
Will the Under-Secretary of State please explain why that is so? It is an extraordinary provision. If the purpose were to enable people of British origin or ancestry, as a protection after independence, to register as United Kingdom nationals and therefore, if patrial, to enjoy a right of entry to Britain, I could understand it. But I cannot understand

a seemingly totally open-ended provision of this kind. It is yet another manifestation of the evident nonsense that our current citizenship laws get us into.

Mr. Peter Bottomley: I can summarise my views on Zimbabwe by saying that I have seldom been in agreement with my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) but, like him, I welcome the coming of Zimbabwe into the Commonwealth. I hope that the recriminations which are dying down in Zimbabwe will die down in this country. I hope particularly that lessons can be learned from what has happened in Southern Rhodesia, so that in South Africa it will be possible to move without the intervention of widespread violence to the accomodation of rights for all people that we have now achieved in Zimbabwe over too many years and after too many deaths.
I also hope it will be possible to learn the lesson in Angola, where people like Mr. Mugabe are fighting for the kind of elections that brought ZANU into power in Zimbabwe.
My belief is that Zimbabwe can, but will not necessarily, provide a better model for other countries in Africa, whether or not they are members of the Commonwealth. We may see other elections along the lines of the recent election in Zimbabwe in which people have a genuine choice on tribal grounds—that is of significance in various parts of the United Kingdom—and also between the political approaches and political leaders.
The United Kingdom will be able to play its part in the Commonwealth with Zimbabwe, and I hope that the peace and prosperity which have been brought about by good political intentions and a degree of miraculous intervention from elsewhere will serve as an example for the future, so that many more countries will discover the virtues of relatively free and fair elections. So will the violence that overturns the Governments of many countries die away, and the Commonwealth continue to provide an example for the rest of the world, as the people who set it up intended.

Mr. Ivor Stanbrook: My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) raised an


important point about nationality and the provisions in the order concerning the right of some citizens of Zimbabwe to be registered as citizens of the United Kingdom and colonies within 12 months. This may be legislative tidying-up, but I hope that my hon. Friend the Under-Secretary of State will make the position clearer.
It is important to make clear that the citizenship provisions for Zimbabwe are different from those affecting other colonies which have become independent, and goodness knows our nationality law is complicated enough as it is. Exceptionally, Southern Rhodesia as a colony had its own citizenship as far back as 1951, after the British Nationality Act 1948. Every other independent Commonwealth country acquired citizenship on independence, but Southern Rhodesia had citizenship from 1951, even as a colony. As a result, the present nationality situation of the residents of Zimbabwe needs clarification.
It is especially important to establish that those persons in Zimbabwe who hold passports and are citizens of the United Kingdom and colonies are entitled to come to this country and live here. There are perhaps as many as 120,000 such people, which is not a small number. In case the hon. Member for Merthyr Tydfil (Mr. Rowlands) feels that it is that should be made clear.

Mr. Rowlands: That is a separate issue.

Mr. Stanbrook: The hon. Gentleman is obviously not confused.
The part of the order relating to additional provisions for registration no doubt refers to those who, for one reason or another, are not at present citizens of the United Kingdom and colonies and do not have the right of abode in this country. For them these provisions will remain for about 12 months—and it is perhaps quite a small number. If that is so, it is not an unusual measure in consequential provisions legislation affecting the dissolution of Empire.
We are again dealing with consequential provisions affecting the independence of a colony. There is no extradition arrangement between the United Kingdom and Zimbabwe as from independence. As from Zimbabwe's accession to the Commonwealth, the appropriate legislation is the Fugitive Offenders Act 1967.

Had the draftsman of this order been more anxious to consolidate all the law within one order and not have consequential provisions in dribs and drabs, he would have included a provision to designate Zimbabwe as a Commonwealth country for the purposes of the 1967 Act. We should not then need a fresh order to be laid before this House.

Mr. Nicholas Winterton: I congratulate my hon. Friend the Under-Secretary of State on his clear and matter-of-fact presentation of the order.
Unlike the hon. Member for Stockport, South (Mr. McNally), I believe that my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) has performed a service not only to this House but to history in presenting the position of the new republic of Rhodesia. I shall still call it that. I am attached to that country and to that name. I hope that the House will forgive me.
It was a great pity that the hon. Member for Stockport, South took an arrogant attitude to my right hon. Friend's rational explanation. As the hon. Member for Inverness (Mr. Johnston) said, at this time we should not be using angry words. We are here basically to welcome the new country to the Commonwealth. I join all hon. Members who have spoken so far in welcoming the new country. I hope that it will long remain in the Commonwealth, and follow its best practices of democracy and not the worst. I also hope that those countries that support Mr. Robert Mugabe, the new Prime Minister of a country that I hope will turn out to be the Switzerland of Southern Africa, will honour the standards of democracy that they encouraged us to force on Rhodesia. In the next few years I hope that they, too, will move towards true democracy. We often hear in this Chamber of moves to majority rule. I wonder, however, whether majority rule has any relevance to democracy. I am not sure that it has because to me one man or one woman having one vote once is not democracy. It can bring as many injustices as can the limited forms of democracy based on colour which have, sadly, applied in the past.

Mr. Deputy Speaker: It may not be democracy, but I do not think that it is in the order either.

Mr. Winterton: I hope that you will agree, Mr. Deputy Speaker that in fairly general terms we are welcoming a new country into the Commonwealth. That is what the order is all about. I am expressing the hope that the best standards and example of the Commonwealth will be practised in Rhodesia. I hope that Mr. Mugabe, who I understand is in this country, will read the Hansard report of this debate. I hope that he will take on board the message from those who, like myself, perhaps have not taken his side in the past but who wish him well as the Prime Minister of this great country.
Perhaps I may reflect the views of my hon. Friend the Member for Woolwich, West (Mr. Bottomley), who said that what happens in Zimbabwe—I have mouthed the word at long last, and better than some of my colleagues who have seemed to stumble over it as I almost did—can set the pattern for future evolutionary progress in the whole of Southern Africa. I welcome the decision by Mr. Mugabe and his Government to have proper economic, commercial and political relationships with the Republic of South Africa.
Mr. Mugabe is an important Prime Minister in a vital area of the African continent and I think that he is well aware that the threat to Africa comes not from South Africa, but, as my right hon. Friend the Member for Pavilion has said so clearly, from the lengthening imperialist shadow of the Soviet Union and its satellite mercenary States.
Zimbabwe can do a great deal to affect the future of Southern Africa. I hope that Mr. Mugabe who, as a well-intentioned practical man—certainly since he assumed power as Prime Minister designate and now as Prime Minister proper of that country—has made some highly responsible statements about the way in which he wants that country to be run, has thrown off the Marxist cloak—

Mr. Deputy Speaker: Order. Perhaps the hon. Gentleman can refer me to the part of the order with which he is dealing.

Mr. Winterton: I believe that the Commonwealth involves parliamentary democracy and stands for parliamentary democracy in one form or another.

Mr. Rowlands: The hon. Member is being silly and supercilious.

Mr. Winterton: I am not sure that the forms of Marxist Government in Africa have much relevance to parliamentary democracy, which we believe to be a vital part of the Commonwealth. The hon. Member for Merthyr Tydfil (Mr. Rowlands) and I have crossed swords on this matter in this House. Does he not agree that the Commonwealth is about parliamentary democracy? He eulogised and waxed most lyrical in his introductory remarks at the beginning of the debate about what the Commonwealth had done. Can we hope that the best standards and examples of the Commonwealth can be practised in Rhodesia and that, within five years, there will be another democratic election in that country? Can we hope that people such as Mr. David Smith and Mr. Norman will be in office in some capacity or other ensuring that the good will that has been shown by Mr. Mugabe to date will continue?
I endorse the views of Mr. Joshua Nkomo, Minister of Home Affairs and perhaps one of the fathers of the new Zimbabwe, when he told an audience of 20,000 in Bulawayo a fortnight ago that independence must be made to succeed and that people who wanted to bring chaos to the country must be prevented from doing so. I mention that because the killing in Zimbabwe has not stopped since independence. More people are now dying in that country than were dying in the previous civil war situation. Political killings have gone up four times. I should like clarification from my hon. Friend the Under-Secretary. Not a great deal of what is happening has appeared in the newspapers of the Western world. I wonder why this news has not been appearing—

Mr. Deputy Speaker: Order. I appeal to the hon. Gentleman to refer to the statutory instrument with which the House is dealing.

Mr. Winterton: I am most grateful, Mr. Deputy Speaker, for your advice. I shall endeavour in my few remaining remarks to keep closely to the order that the House is debating. The order deals with aid. The amount of £75 million is perhaps not enough. I hope that diplomatic, commercial and economic pressure can be brought to bear on Mr. Mugabe


to ensure press freedom and television and newspapers are not instructed about what they can and cannot show and print.
If this country is to set the pace for evolutionary, peaceful change in Southern Africa—I pray that it does and that it can—we have to ensure there is genuine freedom for the people of that country. Otherwise, to take the words that might have been used by the hon. Member for Stockport, South, the people of Zimbabwe will merely have changed one tyranny for a black tyranny. That was surely not our aim when we sought to bring peaceful change and democracy, by majority rule, to that country. My welcome is as warm as that of any hon. Member who has spoken. I shall seek to visit the country again, if Mr. Mugabe and his Government so permit, because I believe it to be a great country that can set the pattern for the whole of Southern Africa in the immediate future.

Mr. Peter Emery: As the last Back Bench speaker in the debate, and even at this late hour, I welcome the entry of Zimbabwe into the Commonwealth. This is a remarkable order. From listening to the vitriol poured out by the media of South Africa and Rhodesia in the last seven years, one would have ruled out absolutely the concept of a Government led by Robert Mugabe asking, as their first act, to become a member of the Commonwealth. We would have expected Britain to be rejected and for there to have been an embracing of Russia and the Communist world.
On the matter of press freedom, I recount only that on the last day I spent in that country as part of the parliamentary team observing the elections—four of its members have spoken in the debate—I was giving a 15-minute television interview in the middle of which there was a breakdown. There was a delay of seven or eight minutes. Nine white members of the corporation—directors of programmes, producers and technicians—told me unanimously that nothing that Robert Mugabe could do, in censoring or manipulating the news, would be as bad as what had occurred in the last 16 years under Mr. Smith. It is worth remembering that when we welcome Zimbabwe to the Commonwealth.
The hon. Member for Merthyr Tydfil (Mr. Rowlands) stressed the Coinmon

wealth link in the solution to the problem. He was ungenerous not to pay tribute to the role which the Prime Minister played and the marvellous role played by the Foreign Secretary. Nobody detracts from the Commonwealth's role, but credit must go where it is due. That credit is deserved by the Prime Minister and the Foreign Secretary.
Zimbabwe's entry to the Commonwealth could be the forerunner to South Africa's return to the Commonwealth. The tragedy of the last 16 years is the missed years that Smith had to create a multi-racial society within Rhodesia/ Zimbabwe. If that lesson could be learnt in South Africa, and if South Africa could bring about a multi-racial society for itself, we might have Commonwealth order for South Africa. That would be another major achievement.
My right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) spoke about sanctions. I agree that sanctions did much to make Zimbabwe self-sufficient. He was deprecating about the wine. He is wrong. The Rhodesian white wine is excellent. I am not sure about the red wine, but I can introduce him to the white wine so that he might change his mind, as perhaps he might about his criticisms of Robert Mugabe wanting a one-party Government.
There was no need, with a majority of 57 out of 100, for Mr. Robert Mugabe to ask even Joshua Nkomo to join him. Certainly there was no need to invite two whites to join the Government. The signs that democracy is being carried out—which my hon. Friend the Member for Macclesfield (Mr. Winterton) wished to stress—have been greater in the last six weeks than anybody could have imagined. Nobody would have believed that Robert Mugabe would have come to Government without any recrimination at all. Not once has he even suggested that certain of the white people who treated his Sho-nas so badly would have to mark their words. We have not even heard a statement such as " We are the masters now". But we hear that from white people here. The black Prime Minister demands unity in an exemplary fashion which could never have been expected.
Of course things can go wrong in the future. No one can look into a glass ball and predict what will happen in four or five years. I asked Mr. Robert Mugabe


how I could assure the British people that his declarations about unity and his wishes for the future of his country would be carried out. I said " It might be a silly question, but is there anything that you can tell me? " His answer was " I can do no more than assure people of the truthfulness of my words and ask them to judge me in two, three or four years time when I have proved that I mean what I say." If that is so, for Zimbabwe and Southern Africa, Robert Mugabe can do what Jomo Kenyatta did for Kenya. That would be a major achievement for the benefit of the Commonwealth and the world.

Mr. Luce: With the leave of the House, I shall in these last few minutes respond to the debate. In all likelihood this is probably the last occasion upon which we shall be debating legislation concerning our outstanding responsibilities to the old country of Rhodesia. I say probably. As far as I am aware this is our last opportunity to debate this and it is an historic occasion.
I owe it to my hon. Friends to respond particularly to one or two points made about citizenship. My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) I know holds extremely strong views, because he and I have taken part in previous debates that have provided for the independence of certain countries. I know that he feels—and I belive that his is probably the view of the majority of the House—that the nationality laws badly need reforming. As my hon. Friend knows, we are pledged to do that. He will then have an opportunity, to make his views fully known to the House.
I do not think that it would be wise for me to be drawn in great detail into the complexities of the citizenship laws, but I think that it is right that I should clarify the outstanding point which was raised by my hon. Friend, and which was more or less confirmed by my hon. Friend the Member for Orpington (Mr. Stan-brook).
There is no unusual open-ended commitment provided in this legislation. The complex part—which is difficult for anyone to comprehend—is the continuation of section 12(6) of the Nationality Act 1948. This provision has been allowed for in previous independence constitu

tions and it means that there is a certain number of people—we think extremely small—in Zimbabwe who are eligible for registration as citizens of the United Kingdom and Colonies. They have not as yet registered. We feel, in the circumstances of Zimbabwe and its history, that it is only right that we should keep this option open to enable those people to register within the next year or so.
We are not talking of the right of abode. We are talking about the right to register as citizens of the United Kingdom and Colonies. I must reaffirm that this is a very small number of people. However, it might be helpful to the House if I state that we have a rough estimate of the number of people who have the right of abode.
We reckon that there are now some 65,000 citizens of the United Kingdom and Colonies in Zimbabwe who have the right of abode in this country. The people who are Commonwealth citizens with patriality rights of abode in this country number approximately 60,000. Both these figures include children so we are talking of approximately 125,000 people who have a right of abode in this country.
But naturally, and judging by the spirit of this debate, we all hope that the vast majority of those people will continue to play their constructive part in the affairs of Zimbabwe, thus contributing to the prosperity of that country.
I respond briefly to the points made by the hon. Members for Merthyr Tydfil (Mr. Rowlands) and for Stockport, South (Mr. McNally) about aid funds being used for development purposes.
I have made the position clear about debts and Mr. Mugabe has made it absolutely plain that his country will honour the debts to this country which accumulated prior to 1965. As regards the provision of aid to Zimbabwe, we have announced the figure of £75 million for the next three years. That is a commitment for aid for the development of Zimbabwe, whether in agriculture, the furthering of the general development of the country or for infrastructure. It is not related to debts. It is related solely to the development of Zimbabwe.
As for the armed forces, we already have a British Army training team in Zimbabwe which is assisting with the


amalgamation of forces. That is of great importance to Mr. Mugabe at present and I hope that we are able to assist him fully in that regard
My hon. Friend the Member for Epping Forest (Mr. Biggs-Davison) asked when Zimbabwe House would open. We have not as yet had an indication from Mr. Mugabe and his Government. As my hon. Friend knows, we now have a high commissioner in Salisbury, and I anticipate that before very long the Zimbabwean Government will appoint a high commissioner to this country. However, we do not know the date as yet.
The remarkable thing about this debate is that, however different our opinions are about the handling of the history of Zimbabwe, the common thread has been the spirit of good will towards the new Zimbabwe entering the Commonwealth as the forty-third member. I think that that spirit will go out to the country of Zimbabwe, will be acknowledged by the Government of Zimbabwe and will be a great source of encouragement to them in their great and challenging task ahead With that, I commend the order to the House.

Question put and agreed to

Resolved,
That the draft Zimbabwe (Independence and Membership of the Commonwealth) (Consequential Provisions) Order 1980, which was laid before this House on 16 April be approved.

NORTHERN IRELAND AGRICULTURAL TRUST

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Le Marchant.]

Mr. Tom Pendry: Even at this wee hour, I am grateful for the opportunity of raising the subject of the Northern Ireland Agricultural Trust and in particular the Government's intention to terminate it. I fully recognise that the Under-Secretary responsible for the decision to close the Trust has responsibilities in government other than agricultural matters and that he is currently abroad, no doubt doing valuable business for the economy of Northern Ireland. Indeed, he was courteous enough to contact me to express his regrets at not being in his place on

the Front Bench tonight. But I am afraid that much of what I have to say bears upon him directly, and his decision to phase out the Trust, which I think was the worst decision which he has made since taking office.
I say that with a sad heart, because I believe the hon. Gentleman to be a good Minister, obviously not quite as good as his immediate predecessor, but nevertheless a good one. It saddens me to think that he arrived at his conclusion to terminate the activities of the Trust without giving a great deal of thought to it. I welcome the fact that the Under-Secretary—the hon. Member for Becken-ham (Mr. Goodhart)—has taken his place, but I hope that I shall receive more than blanket responses to the points I wish to make, and the points which the hon. Member for Down, North (Mr. Kilfedder) will make if he succeeds in catching the eye of the Chair.
Agriculture is the most important industry in Northern Ireland, contributing 6 per cent. of the gross domestic product and employing nearly 14 per cent. of its work force. Already the farmer in Northern Ireland has suffered greatly from EEC policies which, among other things, fail to recognise the unique nature of the Northern Ireland economy. These policies have resulted in a narrow margin of profit, which has inhibited the introduction of new ideas and technology there. Thus, for the most part, Northern Ireland has remained a traditional, agrarian area in a world of modern food processing and marketing industries.
As the Under-Secretary himself has pointed out on a number of occasions, the key to modern agriculture is marketing. It is, Therefore, surely ironic, and not a little sad, that at a time when every other major country is increasing its public expenditure in marketing industries, such as the recent 40 per cent. increase by the Republic of Ireland, which increased its support to about £8 million, the Government have decided to abolish a Trust which has been allocated only £413,000. That is a major blow to the agricultural community in Northern Ireland and a piece of blind stupidity, characteristic of the Government's draconian public expenditure cuts. It is evident that this was done with little thought. The Minister of Agriculture, Fisheries and Food did not examine the Trust, nor did his


marketing team visit Northern Ireland to take a look at its activities and neither did Sir Robert Kidd, in his investigation of quangos.
Instead, the review was carried out by the Department of Agriculture in Northern Ireland, which has publicly admitted that no one on its staff has marketing skills comparable with those of the Trust.
I note that on 16 February, the Under-Secretary of State assured the SDLP that marketing, development and research functions previously dealt with by the Trust would be strengthened by the Department of Agriculture, Fisheries and Food. How could that be said with any confidence? Only a few days later, on 29 February, a senior civil servant at the Department—who is most competent to comment—stated that the Department had no one on its staff with comparable marketing skills. He said that neither he nor the Department had any intention of recruiting those skills.
In addition, the organisations that are expected to assume the Trust's responsibilities are not geared for large-scale marketing operations. Specifically, the Central Council for Agricultural and Horticultural Co-operation is still a probationary body, and has only one Northern Ireland representative. The Ulster Office is rumoured to be the next target for the axe. I hope that the Minister will assure us to the contrary. That office performs a valuable service, which is complementary to the Trust's work. The British Food Export Council has stated that it will become increasingly difficult to work on behalf of Northern Ireland without the confidence and co-operation which were the trade marks of the Trust. That became evident last week when the Trust held a marketing exhibition in London. I am told that 15 of the largest buyers in Great Britain participated, and that it was the best trade function that they had attended in the past two years.
Despite the adverse conditions facing any business venture in Northern Ireland, the Trust has had an impressive record. In its most recent report, the Trust listed 14 production projects, six processing projects and widespread success at marketing exhibitions in London, Paris and Germany. Recently, one operation in Bahrain secured over £500,000 in exports.

Considering that agriculture is Northern Ireland's most important industry, with 75 per cent., or £300 million out of £400 million, of output attributable to exports, how can Northern Ireland not afford to have the Agricultural Trust?
It is clear that the recent success in Bahrain has more than paid for the Trust's existence. From my brief experience as a Minister with responsibility for agriculture in Northern Ireland, I believe that the Trust has done more for agriculture in the past 12 years than any other body. The small savings resulting from the decision will be out of all proportion, and will have a devastating effect on agriculture and the development of a modern food processing and marketing industry in Northern Ireland.
The abolition of the Trust will also have an adverse effect on future job development in Northern Ireland. The agricultural sector is already over-dependent upon commodity trading. That dependency is exporting thousands of processing, packaging and marketing jobs elsewhere. Currently, the Trust has six processing projects in operation. It was committed to increasing the number of projects until most of the processing of indigenous goods was being done in Northern Ireland. With unemployment in Northern Ireland at about 12 per cent., why are the Government willing to export desperately needed jobs?
It is evident that the Under-Secretary of State is concerned more about adhering to the economic dogmas of the Prime Minister than about the future well-being of agriculture in Northern Ireland. The Minister contradicts his longstanding commitment to marketing. Only last October, when awarding the Gosford prize at Dundonald House, he reiterated his commitment to agricultural marketing. He said:
 I believe that the deciding factor between profit and loss is not the disadvantages in production costs but rather what returns organizations can achieve from the market. If that is accepted then the battle to maintain the agricultural sector at or near present levels will be won or lost in marketing. So I would exhort everyone involved to press for an even greater effort in agriculture particularly a more positive approach to marketing.
However, given the actions of the Under-Secretary of State since he made that speech, that goal is unlikely to be achieved. But I believe that, had there


been a thorough investigation, the Government would not have decided to terminate the Trust; nor would the Minister have had to contradict himself publicly.
I ask, in the wee hours of the morning, that the Minister responsible for agriculture should stand by his pledge made on 26 September, when, speaking to a delegation from the Irish Congress of Trade Unions, he assured it that he was conscious of the need to bear Northern Ireland interests in mind in the operation of the Central Council for Agricultural and Horticultural Co-operation and informed the group of his intention to invite that organisation to review agricultural marketing in Northern Ireland.
I ask the Minister here tonight to reflect on what I have said, to go away if necessary to consult his colleagues, and to consider, even at this late stage, appointing either the Minister of Agriculture, Fisheries and Food's marketing team or Sir Robin Kidd's committee of inquiry to look afresh at the Trust's activities and achievements before it is too late.

Mr. James Kilfedder: I wish to take part in this debate because I feel very strongly about the Northern Ireland Agricultural Trust.
The House is indebted to the hon. Member for Stalybridge and Hyde (Mr. Pendry) for raising the subject of the future of the Trust on the Adjournment. It is not just a matter of the House being indebted to him. I think that I speak for most Ulster people who are involved in agriculture in the Province when I wholeheartedly support his plea—a plea which I have made in the past to the Minister but which he has so far rejected.
I should put on record that the Trust has earned the support of elected representatives in Northern Ireland, the Association of Local Authorities and numerous councils. They feel that the Trust should be retained.
Like the hon. Member for Stalybridge and Hyde, I question the wisdom of the Government's decision to terminate the existence of the Trust and to deprive the Province of the valuable work which it performs, particularly in the realm of marketing.
The Minister has put forward the excuse that the Trust's marketing expertise

is being duplicated elsewhere. That is the inference from all his statements. But that answer is not correct. If the Minister had conducted an independent investigation, he would have discovered what most of us know—certainly those of us who live and work in Northern Ireland—namely, that the other organisations involved in agriculture in Ulster had always deferred, on the marketing aspects of the industry, to the Trust.
Since agriculture is the largest industry in Ulster, I should have expected the most careful, impartial examination before a decision was taken to axe the Trust. Sadly, however, the Trust is a victim of the Government's cuts. It was a decision made by a Conservative Government looking for something to get rid of to save some money. I think that the Government are right to try to save money. Far too much money has been wasted by Governments in the past. But this is a false economy, because, as the hon. Member for Stalybridge and Hyde has pointed out—I do not intend to rehearse the facts that he has already given to the House—the Trust has brought quite a large amount of money to Northern Ireland and has given considerable financial help to food producers in the Province.
Presumably the decision was taken to abolish the Trust because it was seen by the bureaucrats as an easy sacrifice. They believed that it could be axed with the minimum of fuss. If an independent investigation had been held, the Government would have discovered that the Trust had become a model for other countries in Europe. For all I know, that might be the position elsewhere. However, it is highly respected by its European counterparts. At a conference held at the Hague in January 1979, the Dutch publicly paid tribute to the Trust. They expressed astonishment at its impressive record of achievement, given the scarce resources with which it has had to operate.
The Minister and the Government do not have to go to Europe to find confirmation of what I say and what has been said by the hon. Member for Stalybridge and Hyde. If the Minister had consulted officials in the Department of Commerce, he would have found that when that Department was setting up its marketing office it turned to the Trust for advice.


The success of the Department's marketing office is due in part to the fact that it adopted an approach to marketing similar to that which was pioneered by the Trust. An impressive and recent example is the exhibition that was sponsored by the Trust in Bahrain, where orders worth half a million pounds were obtained for Northern Ireland food producers.
It is clear that the decision to abolish the Trust is one of stupid bureaucracy. It is being done because of party political dogma. It is a decision that does not take note of the special problems in Northern Ireland. It is a decision that will exacerbate unemployment in the Province, because jobs in food processing, packaging and marketing will go elsewhere. They will be lost to other countries. Let the Government remember that 75 per cent. of Ulster farmers depend upon export sales. Therefore the decision to axe the Trust will have an adverse effect not only on the agricultural community but on the entire Ulster economy.
As I have said, agriculture is the leading industry in the Province. It contributes 6 per cent. of the gross national product and employs 14 per cent. of the work force of Ulster. Amidst a world of modern food processing industries, the only hope for Ulster is to continue the marketing efforts of the Trust. This year at the annual SIAL conference Northern Ireland will have only one representative compared with the usual 15 sent by the Trust. If the Government's plan to axe the Trust is carried out, how can Northern Ireland expect to compete with the rest of Europe?
I join the hon. Member for Stalybridge and Hyde in demanding that the Government review their decision to terminate the Trust and appoint an independent inspectorate. An investigation would result in a report that urged, as I have constantly urged, that the Trust should be retained for the benefit of all those involved in agriculture and food processing in the Province.

The Under-Secretary of State for Northern Ireland (Mr. Philip Goodhart): First, I wish to apologise to the hon. Member for Stalybridge and Hyde (Mr. Pendry) and the hon. Member for Down, North (Mr. Kilfedder) for the absence of my hon. Friend the Under

Secretary of State—the hon. Member for Pudsey (Mr. Shaw)—who has direct ministerial responsibility for the Northern Ireland Agricultural Trust. As he told the hon. Member for Stalybridge and Hyde in his letter, he is abroad on an official mission to the Netherlands. That mission has already been postponed once, and we hope that it will lead to increased investment and employment in Northern Ireland.
Meanwhile, I join both hon. Members in the tribute they have paid to the past work of the Northern Ireland Agricultural Trust. Since it was established in 1967, it has played an important role in the swift development of the meat processing industry in Northern Ireland. At the same time it has played a leading role in pioneering the roll-on, roll-off system of shipping live cattle from Northern Ireland to Britain.
Over the years the Trust has operated on a broad front. It has done important work in flax growing and marketing, and it has taken the lead in over-transplantation in potato processing, grass drying and gravel tunnel drainage. In the last nine years it has had a role in helping to promote the marketing of agricultural produce outside Northern Ireland. In recent years some 30 per cent. of the Trust's £400,000 budget went into this part of its work.
But to some extent the Trust has been the victim of its own success. It was meant to encourage new commercial developments in agricultural production and processing, and this role has been increasingly filled by those directly involved and by other organisations. There is no doubt that a serious overlap of functions has been growing between the Trust and the main industrial organisations in Northern Ireland, such as the Department of Commerce, the Northern Ireland Development Agency, the Local Enterprise Development Unit and the principal food export agency—the British Food Export Council.
In addition there has been increased duplication of effort by the Trust and the services provided by the Department of Agriculture for Northern Ireland, the agricultural marketing boards, the Livestock Marketing Commission and, in particular, the Central Council for Agricultural and Horticultural Co-operation.


whose terms of reference have recently been widened.
Much has been made in this debate of the Trust's role and effectiveness in the experience of export markets for Northern Ireland agricultural produce. It has never considered that this should be a primary function of the Trust, in view of the existence of other agencies to help food exporters—in particular, the British Food Export Council, which exists to help food manufacturers and processers in the United Kingdom to exhibit at international food fairs. Food firms in Northern Ireland can also receive advice from the Departments of Agriculture and Commerce towards continued participation in domestic and foreign promotions. The advisory services of the Department of Agriculture are there to help all sectors of agriculture. I am glad to say that they enjoy good relationships, as the hon. Member knows, with the industry.
The Government are satisfied that at farm level the more essential activities of the Trust can be absorbed by the Department of Agriculture at less cost to the taxpayer. Processing projects will be taken up to the Department of Commerce, the Northern Ireland Development Agency, and the Local Enterprise Development Unit. Marketing efforts must be the responsibility of organisations actually involved in selling, with assistance, as necessary, from the British Food Export Council and Government Departments.
I wish to assure the House that the Government carried out a detailed assessment of the work of the Trust and weighed up all the options for alternative savings in agriculture in Northern Ireland before we took what was a very difficult decision to wind up the organisation. Having made that decision, we decided in the interests of all concerned to move swiftly to ensure as speedy a rundown of Trust affairs as possible.

Mr. Pendry: Will the Minister elaborate on that point and tell the House how detailed was the investigation and who carried it out, and why it was not carried out by organisations that were well fitted to carry out such an investigation?

Mr. Goodhart: The Minister concerned was personally involved in it.
I turn now to the question of consultation, which is of substantial importance.

The Ulster Farmers Union, which was the main farming body involved when the Trust was set up, was informed by my colleague, the Under-Secretary of State, personally before the announcement was made on 13 December 1979. Alas, on the marketing and the processing side, there are no similar umbrella organisations which would have made consultation a practical proposition. The Ulster Farmers Union has, with regret, accepted the reasons for the decision. Of course, it would have liked the Trust to continue if no savings had to be made, but the important point is that neither the Ulster Farmers Union nor any other body has been able to suggest an alternative saving which would be preferable for the farmers of Northern Ireland. Meanwhile, no important section of the food processing or food marketing side of the industry has expressed any undue anxiety about the winding up of the Trust.

Mr. Kilfedder: Will the Minister give way?

Mr. Goodhart: I have only two minutes left.
I wish again to place on record the Government's appreciation of the value of the work done by the Trust over the past 13 years, and of the hard work and dedication of the chairman, the appointed members and the staff. The chairman and members will continue in office to plan and supervise the winding-up arrangements. The staff who become redundant as the work is reduced during 1980 will qualify for redundancy payments in accordance with arrangements under which they were recruited and employed. Generally speaking, this will mean the local government officers scheme, which in certain cases can be better than the Civil Service scheme itself.
The Government are satisfied that the decision to wind up the Trust was a correct one, and it is part of the present Government's much wider commitment to reduce the role of government in public life, to cut public expenditure and to produce a smaller, more efficient and economic administration.

Question put and agreed to.

Adjourned accordingly at five minutes to Two o'clock.